Document:

Exhibit 10.14

                            SHARE PURCHASE AGREEMENT

     THIS SHARE  PURCHASE  AGREEMENT  ("Agreement")  is dated as of November 27,
2001  and is  entered  into  by  and  among  Cellegy  Pharmaceuticals,  Inc.,  a
California   corporation   ("Cellegy"),   Vaxis  Therapeutics   Corporation,   a
corporation  organized  under the OBCA ("Vaxis") and the  stockholders  of Vaxis
whose names are  subscribed  hereto on the signature page to this Agreement (the
"Stockholders").

BACKGROUND

     A. Cellegy  desires to acquire the  business of Vaxis  through the purchase
from the  Stockholders  of all of the issued and  outstanding  share  capital of
Vaxis, on the terms and conditions set forth in this Agreement.

     B. The boards of directors of Cellegy and Vaxis each have  determined  that
it would be in each of  their  best  interests  to  carry  out the  transactions
contemplated by this Agreement,  and the Stockholders  desire to sell all of the
share  capital of Vaxis that they own,  subject to the terms and  conditions  of
this Agreement.

AGREEMENT

     The parties agree as follows:

ARTICLE I
DEFINITIONS AND INTERPRETATION

     1.1 Definitions.  As used in this Agreement, the following terms shall have
the following meanings:

     "Agreement" means this Share Purchase  Agreement,  including all schedules,
and all amendments or restatements, as permitted, and references to "Article" or
"Section" mean the specified Article or Section of this Agreement.

     "Arm's  Length" has the meaning  that it has for purposes of the Income Tax
Act (Canada).

     "Benefit Plans" means plans, arrangements,  agreements, programs, policies,
practices or undertakings,  whether oral or written, formal or informal,  funded
or unfunded,  registered or  unregistered  to which Vaxis is a party or by which
Vaxis  is bound or under  which  Vaxis  has,  or will  have,  any  liability  or
contingent liability, relating to:

         (a) Pension Plans;

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         (b) plans in the nature of insurance  plans,  providing for  employment
benefits relating to disability or wage or benefits  continuation during periods
of absence from work (including,  short term  disability,  long term disability,
workers  compensation  and  maternity  and  parental  leave),  and  any  and all
employment benefits relating to hospitalization,  healthcare,  medical or dental
treatments  or expenses,  life  insurance,  accidental  death and  dismemberment
insurance,  death or survivor's benefits and supplementary employment insurance,
in each  case  regardless  of  whether  or not  such  benefits  are  insured  or
self-insured; or

         (c)  plans  in the  nature  of  compensation  plans,  which  means  all
employment  benefits  relating  to  bonuses,   incentive  pay  or  compensation,
performance  compensation,  deferred  compensation,  profit  sharing or deferred
profit sharing, share purchase, share option, stock appreciation, phantom stock,
vacation or vacation pay, sick pay, severance or termination pay, employee loans
or separation from service benefits,  or any other type of arrangement providing
for compensation or benefits additional to base pay or salary;

     with respect to any of its  Employees or former  employees (or any spouses,
dependants,   survivors  or  beneficiaries  of  any  such  Employees  or  former
employees), directors or officers, individuals working on contract with Vaxis or
other individuals  providing services to any of them of a kind normally provided
by employees or eligible dependants of such Person excluding Statutory Plans.

     "Business Day" means any day, other than a Saturday or Sunday, on which the
Royal Bank of Canada in Kingston, Ontario, Canada is open for commercial banking
business during normal banking hours.

     "Canadian GAAP" means Canadian  generally  accepted  accounting  principles
from time to time approved by the Canadian  Institute of Chartered  Accountants,
or any successor thereto, applicable as at the time on which such calculation is
made or required to be made in accordance with generally accounting principles.

     "Cash Amount" means $240,000, or in Cellegy's  discretion,  the U.S. dollar
equivalent  of  $240,000,  based on the noon spot rate of exchange  from time to
time in effect as announced by the Bank of Canada,  determined on the day before
such amounts are required to be delivered.

     "Cellegy" has the meaning more particularly described in the Preamble.

     "Cellegy  Average Price" means the average of the closing prices of Cellegy
Common Stock on the NASDAQ National  Market for the 15 consecutive  trading days
ending on the day before the date as of which a particular  determination  under
this Agreement is made.

     "Cellegy Common Stock" means the common stock, no par value, of Cellegy.

     "Claims"  includes  claims,  demands,  actions,  suits,  causes of  action,
assessment or reassessments,  charges, judgments, debts, liabilities,  expenses,
costs,  damages or losses,  including loss of value,  professional  fees and all
costs  incurred  in  investigating  or  pursuing  any  of the  foregoing  or any
proceeding relating to any of the foregoing.

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     "Closing"  has the  meaning  more  particularly  described  in Section  3.5
hereto.

     "Closing Date" has the meaning more  particularly  described in Section 3.5
hereto.

     "Collective  Agreements" means collective  agreements and related documents
including benefit  agreements,  letters of understanding,  letters of intent and
other  written  communications  with  bargaining  agents or trade unions for the
Employees or Dependent  Contractors  by which Vaxis is bound or which impose any
obligations upon Vaxis or set out the  understanding of the parties with respect
to the meaning of any provisions of such collective agreements.

     "Contract"  means any  contract,  license,  lease,  agreement,  commitment,
entitlement  or  engagement to which Vaxis is a party or by which it is bound or
under which Vaxis has, or will have, any liability or contingent liability,  and
includes any quotation,  order or tender for any contract which remains open for
acceptance and any warranty, guarantee or commitment (express or implied).

     "Dependent  Contractor"  has the meaning given in the Labour  Relations Act
(Ontario).

     "Dollars  or  $":  Unless  otherwise  specified  in  this  Agreement,   all
references to dollar amounts in this Agreement shall refer to Canadian  dollars.
Where this Agreement requires or permits Cellegy to make cash payments,  Cellegy
may, at its option, deliver the U.S. dollar equivalent of the specified Canadian
amount,  based on the noon spot rate of exchange  from time to time in effect as
announced by the Bank of Canada,  determined  on the day before such amounts are
required to be delivered.

     "Earn-Out  Consideration"  has the meaning more  particularly  described in
Section 3.2 hereto.

     "Employees"  means  those  individuals  employed  or  retained  by Vaxis as
employees  on  a  full-time,  part-time  or  temporary  basis,  including  those
employees on disability leave, parental leave or other absence.

     "Employment Contract" means any Contract, whether oral or written, relating
to an Employee,  including any communication or practice relating to an Employee
which imposes any obligation on Vaxis.

     "Encumbrance"  means any  mortgage,  lien,  pledge,  encumbrance,  security
interest, option, encroachment, reservation, order, decree, judgment, condition,
restriction,  charge,  claim  or  equity  of any  kind,  except  for  any of the
foregoing  which (i) secures a liability  which is  accurately  disclosed in the
financial  statements  of the party  whose  interest  in  property  is  affected
thereby;  (ii) liens for taxes not yet due; and (iii) easements or other similar
rights which do not in the aggregate  materially  interfere with the present use
of the property affected thereby.

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     "Environment"  means the  environment or natural  environment as defined in
any  Environmental  Laws and includes air,  surface  water,  ground water,  land
surface,  soil,  subsurface  strata, any sewer system and the environment in the
workplace.

     "Environmental Approval" means any approval, permit, certificate,  license,
authorization,  consent, agreement,  instruction,  direction,  registration,  or
approval  issued,  granted,  conferred or required by a  Governmental  Authority
pursuant to an  Environmental  Law with respect to the  operations,  business or
assets of Vaxis and includes any sewer surcharge agreement.

     "Environmental Laws" means those Laws relating to the Environment,  product
liability,  or  employee  or public  health and safety,  and  includes  any Laws
relating to the storage,  generation,  use, handling,  manufacture,  processing,
labeling,   advertising,  sale,  display,   transportation,   treatment,  reuse,
recycling, Release and disposal of Hazardous Substances.

     "Escrow Agent" means the Secretary of Cellegy.

     "Escrow Funds" has the meaning given in Section 3.7.

     "Escrow  Release  Dates"  means the  dates  that are 12 months or 48 months
after the Closing, as applicable, as more particularly described in Section 3.7.

     "Escrow Shares" has the meaning given in Section 3.7.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Founders"  means  Michael  Adams,  Ph.D.,  Jeremy  Heaton,  M.D. and James
Banting, Ph.D.

     "Governmental  Authority"  means  any  government,   regulatory  authority,
governmental department, agency, commission, board, tribunal, dispute settlement
panel or body, bureau,  official,  minister,  Crown corporation,  court or other
law, rule or regulation-making  entity having or purporting to have jurisdiction
on behalf of any nation,  or province or state or other  geographic or political
subdivision thereof.

     "Governmental  Authorization" means any authorization,  approval, including
Environmental  Approval,  franchise,  certificate,  order,  consent,  directive,
notice, license,  permit,  variance,  registration or similar right issued to or
required by Vaxis by or from any Governmental Authority.

     "Hazardous  Substance"  means  any  pollutant,  contaminant,  waste  of any
nature,  hazardous substance,  hazardous material,  toxic substance,  prohibited
substance,   dangerous  substance  or  dangerous  good  as  defined,  judicially
interpreted  or identified in any  Environmental  Laws including any asbestos or
asbestos-containing materials.

     "Initial  Consideration"  has the meaning  more  particularly  described in
Section 3.1 hereto.

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     "Intellectual  Property  Rights"  means any and all  intellectual  property
rights in any  jurisdiction,  including,  without  limitation,  patents,  patent
applications,  patent rights, trademarks,  trademark applications,  trade names,
service marks, service mark applications,  copyrights,  copyright  applications,
publication  rights,  computer programs and other computer  software  (including
source codes and object codes), inventions, know-how, trade secrets, technology,
proprietary  processes and formulae (including layouts,  structures,  sequences,
flow  charts,   instructions,   records,   notes  and  other  information  of  a
technological or scientific nature regardless of form), used in whole or in part
or required for the carrying on of the business of Vaxis, as presently conducted
and as proposed to be conducted.

     "Knowledge"  means,  with respect to any party hereto,  with respect to any
fact, circumstance,  event or other matter in question, that any of the officers
or legal or financial  in-house  personnel  of such party (and,  with respect to
Section 4.20 hereof, that any of the persons engaged in development activity for
Vaxis) has actual or deemed knowledge of such fact, circumstance, event or other
matter  after  reasonable  inquiry  of such fact,  circumstance,  event or other
matter.  An individual  will be deemed to have  knowledge of a particular  fact,
circumstance,  event or other  matter if (i) such fact,  circumstance,  event or
other matter is reflected in one or more documents,  written or electronic, that
are or have been in such  individual's  possession  or that would  reasonably be
expected to be reviewed by an individual who has the duties and responsibilities
of  such   individual   in  the  customary   performance   of  such  duties  and
responsibilities,  or (ii) such  knowledge  could be  obtained  from  reasonable
inquiry of those persons  employed by Cellegy or Vaxis (as the case may be), and
any subsidiary of Cellegy,  if any, charged with  administrative  or operational
responsibility for such matter for such party.

     "Laws" means  applicable laws (including  common law),  statutes,  by-laws,
rules, regulations, orders, ordinances,  protocols, codes, guidelines, treaties,
policies,   notices,   directions   and  judicial,   arbitral,   administrative,
ministerial  or  departmental  judgments,  awards or other  requirements  of any
Governmental Authority.

     "Leased Real  Property"  means  premises  which are used by Vaxis which are
leased,  subleased,  licensed or otherwise occupied by Vaxis and the interest of
Vaxis in all plants, buildings, structures,  fixtures, erections,  improvements,
easements,  rights-of-way,  spur  tracks and other  appurtenances  situate on or
forming part of such premises.

     "Material  Adverse  Effect" when used with reference to any entity or group
of  related  entities,   means  any  event,   change,   violation,   inaccuracy,
circumstance or effect  (regardless of whether or not such events or changes are
inconsistent with the  representations  or warranties made by such party in this
Agreement)  that  is or is  reasonably  likely  to  be,  individually  or in the
aggregate,  materially  adverse  to  the  condition  (financial  or  otherwise),
capitalization,  properties,  employees,  assets (including  intangible assets),
business, prospects,  operations or results of operations of such entity and its
Subsidiaries, taken as a whole with its Subsidiaries.

     "Non-Competition Agreement" means the Non-Competition Agreement in the form
entered  into by and among  Cellegy  and each of the  Founders  and Dr.  Charles
Graham.

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     "OBCA" means the Business Corporations Act (Ontario),  as amended from time
to time, and includes any regulations made pursuant to such Act.

     "Occupational Health and Safety Laws" means all Laws relating in full or in
part to the protection of employee or worker health and safety.

     "Owned Real Property"  means real property,  owned or purported to be owned
in fee simple, by Vaxis, or real property,  other than Leased Real Property,  in
which  Vaxis has an  interest,  including  all  plants,  buildings,  structures,
fixtures, erections,  improvements,  easements,  rights-of-way,  spur tracks and
other appurtenances situate on or forming part of such real property.

     "Pension  Plans" means all benefits  relating to  retirement  or retirement
savings including pension plans, pensions or supplemental pensions,  "registered
retirement  savings  plans"  (as  defined  in  the  Income  Tax  Act  (Canada)),
"registered  pension  plans" (as  defined in the  Income Tax Act  (Canada))  and
"retirement  compensation  arrangements"  (as  defined  in the  Income  Tax  Act
(Canada)).

     "Person" means any  individual,  sole  proprietorship,  partnership,  firm,
entity,  unincorporated  association,  unincorporated syndicate,  unincorporated
organization,  trust,  body  corporate,  Governmental  Authority,  and where the
context requires any of the foregoing when they are acting as trustee, executor,
administrator or other legal representative.

     "Pro-Rata Share of the Earn-Out Consideration" means the amount of Earn-Out
Consideration that may be payable to a Stockholder from time to time, calculated
by dividing  the  Earn-Out  Consideration  payable at the time by the  aggregate
number of  Purchased  Shares  issued and  outstanding  on the  Closing  Date and
multiplying  the  result  by  the  number  of  Purchased  Shares  held  by  such
Stockholder on the Closing Date.

     "Purchased Shares" means the Vaxis Common Shares that the Stockholders sell
to  Cellegy  pursuant  to the  terms  of  this  Agreement,  which  shares  shall
constitute  all of the  issued  and  outstanding  share  capital of Vaxis on the
Closing Date.

     "Real Property" means the Owned Real Property and the Leased Real Property,
as more particularly described in Section 4.20.

     "Release"  has  the  meaning  prescribed  in  any  Environmental  Laws  and
includes,  any sudden,  intermittent or gradual release,  spill, leak,  pumping,
addition, pouring, emission, emptying,  discharge,  injection, escape, leaching,
disposal,  dumping,  deposit,  spraying,  burial,   abandonment,   incineration,
seepage, placement or introduction, whether accidental or intentional.

     "Remedial Order" means any administrative  complaint,  direction,  order or
sanction  issued,  filed,  imposed or threatened by any  Governmental  Authority
pursuant  to  any   Environmental   Laws  and  includes,   any  order  requiring
investigation  or remediation of any site or any  remediation or clean-up of any
Hazardous Substance, or requiring that any Release or any

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other  activity be reduced,  modified or  eliminated  or  requiring  any form of
payment or co-operation be provided to any Governmental Authority.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Securities  Act  (Ontario)"  means the  Securities  Act of the Province of
Ontario,  as amended from time to time,  and includes  all  regulations,  rules,
policies and other instruments promulgated thereunder.

     "Statutory  Plans" means statutory Benefit Plans which Vaxis is required to
comply with,  including the Canada Pension Plan and plans administered  pursuant
to applicable  health tax,  workers'  compensation  and  unemployment  insurance
legislation.

     "Stockholders"  means all of the  persons and  entities  who are holders of
Vaxis Common Shares at the Closing Date.

     "Stock  Ratio"  means  the  number  that is the  result  of (i) the  number
obtained by dividing the U.S. dollar equivalent of Cdn$6,000,000,  determined as
of the Closing  Date (or such other date before the Closing as Cellegy and Vaxis
may  agree),  by the Cellegy  Average  Price  determined  as of the date of this
Agreement  (or such other  date  before  the  Closing  as Cellegy  and Vaxis may
agree), divided by (ii) the aggregate number of Purchased Shares.

     "Subsidiary" or "subsidiary"  when used with respect to any party means any
corporation or other organization,  whether  incorporated or unincorporated,  of
which such  party or any other  subsidiary  of such  party is a general  partner
(excluding  partnerships the general partnership interests of which held by such
party or any  subsidiary  of such  party do not have a  majority  of the  voting
interests in such partnership) or of which at least a majority of the securities
or other  interests  having  by their  terms  ordinary  voting  power to elect a
majority of the Board of Directors or others  performing  similar functions with
respect to such  corporations or other  organizations  is directly or indirectly
owned or controlled by such party or by any one or more of the subsidiaries.

     "Tax Returns"  includes,  all returns,  reports,  declarations,  elections,
notices,  filings,  information  returns and statements,  forms,  statements and
other  documents  (whether in tangible,  electronic or other form) and including
schedules,  attachments,  supplements,  appendixes or exhibits thereto prepared,
filed or  required  to be  prepared  or filed by  applicable  Laws in respect of
Taxes.

     "Taxes" means taxes, duties, fees, premiums,  assessments,  imposts, levies
and other charges of any kind whatsoever imposed by any Governmental  Authority,
including all interest,  penalties,  fines, additions to tax or other additional
amounts  imposed by any  Governmental  Authority in respect  thereof,  including
those  levied on, or measured  by, or referred to as,  income,  gross  receipts,
profits, capital, transfer, land transfer, sales, goods and services, harmonized
sales, use, value-added,  excise,  stamp,  withholding,  business,  franchising,
property,  employer  health,  payroll,  employment,   health,  social  services,
education and social security taxes, all surtaxes, all customs duties and import
and  export  taxes,  all  license,  franchise  and  registration  fees  and  all

                                      -7-
<PAGE>

employment  insurance,  health insurance and Canada and other government pension
plan premiums or contributions.

     "Transaction"  means  the  purchase  of the  Purchased  Shares  by  Cellegy
pursuant to the terms of this Agreement and the other transactions  contemplated
hereby.

     "Transaction  Expenses"  has the meaning  more  particularly  described  in
Section 7.8 hereto.

     "Union  Plans"  means  Benefit  Plans  which  are  or  are  required  to be
established and maintained pursuant to a Collective  Agreement and which are not
maintained or administered by Vaxis or any of its affiliates.

     "Vaxis" has the meaning more particularly described in the Preamble.

     "Vaxis Common Shares" means the common shares in the capital of Vaxis.

     "Vaxis Intellectual Property Rights" means all Intellectual Property Rights
that are part of the conduct of the business of Vaxis.

ARTICLE II
THE TRANSACTION

     2.1 The  Purchase.  At the Closing,  Cellegy  shall  purchase the Purchased
Shares from the  Stockholders,  and the  Stockholders  shall sell the  Purchased
Shares to Cellegy, on the terms and subject to the conditions of this Agreement.

     2.2  Further  Assurances.  If, at any time  before  or after  the  Closing,
Cellegy believes or is advised that any further instruments,  deeds, assignments
or  assurances  are   reasonably   necessary  or  desirable  to  consummate  the
Transaction  or to carry out the  purposes  and intent of this  Agreement  at or
after the Closing,  then (i) each of Vaxis and each  Stockholder  covenants  and
agrees that before the Closing it will, upon the reasonable  request of Cellegy,
use best efforts to do,  execute,  acknowledge  and deliver or cause to be done,
executed,  acknowledged and delivered all such further acts, deeds, assignments,
instruments  and  assurances as may be required for the better  carrying out and
performance  of all the terms of this  Agreement,  and (ii)  after  the  Closing
Cellegy,  Vaxis and their  respective  officers  and  directors  may execute and
deliver all such proper acts, deeds, assignments,  instruments and assurances as
may be required for the better  carrying out the performance of all the terms of
this Agreement.

ARTICLE III
PURCHASE AND SALE OF SHARES

     3.1 Purchase Price. Subject to Sections 3.7 and 3.8:

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         (a) The purchase  price for the Purchased  Shares shall be paid to each
Stockholder for each Purchased Share as follows:

               (i)  a number of  shares of  Cellegy  Common  Stock  equal to the
                    Stock Ratio payable to that Stockholder;  provided, however,
                    that the Stockholders specified in Exhibit 3.1 shall receive
                    the Cash  Amount,  allocated  in the  amounts  specified  on
                    Exhibit 3.1, in lieu of a number of shares of Cellegy Common
                    Stock  with a value,  based  on the  Cellegy  Average  Price
                    determined  as of the date of this  Agreement (or such other
                    date before the Closing as Cellegy and Vaxis  agree),  equal
                    to the U.S. dollar equivalent of the Cash Amount;

               (ii) any  Cash  Amount   owing  to  that   Stockholder   as  more
                    particularly set forth in Exhibit 3.1; and

              (iii) the Pro-Rata Share of the Earn-Out  Consideration payable to
                    that Stockholder, as set forth in Section 3.2 below.

         The shares of Cellegy  Common Stock and the Cash Amount  referred to in
paragraphs  (i) and (ii)  above are  collectively  referred  to as the  "Initial
Consideration".  The number of shares of Cellegy  Common Stock to be received by
each Stockholder shall be set forth in a Schedule of Purchasers  mutually agreed
to by Cellegy  and the  Stockholders  on or before the  Closing.  The right of a
Stockholder  immediately before the Closing to receive the Initial Consideration
and  Earn-Out  Consideration  may not be  transferred  or assigned in any manner
other than by will or by the laws of  intestacy,  or by  instrument  to an inter
vivos  or  testamentary  trust  in  which  such  rights  are  to  be  passed  to
beneficiaries  upon the death of the settlor,  in each case with the  transferee
agreeing to be bound by all of the provisions of this Agreement  relating to the
Initial Consideration and Earn-Out Consideration.

         (b) At the Closing, each certificate  representing any Purchased Shares
(a  "Certificate")  shall be  delivered  to Cellegy as set forth in Section  3.3
hereof and,  subject to the  provisions of Sections 3.7 and 3.8 hereof,  Cellegy
shall pay the Initial  Consideration to the  Stockholder.  If before the Closing
Cellegy  should split or combine the shares of Cellegy  Common  Stock,  or pay a
stock  dividend or other stock  distribution  in, or in exchange  of,  shares of
Cellegy Common Stock, or engage in any similar transaction, then the Stock Ratio
will be  appropriately  adjusted to reflect such split,  combination,  dividend,
exchange or other distribution or similar transaction.

         (c) At or before the  Closing,  Vaxis  shall  take such  actions as are
necessary so that all  outstanding  and  unexercised  stock  options,  warrants,
convertible  securities  or any right of any kind to acquire any  securities  of
Vaxis  shall  terminate  and/or  expire,  so  that no  such  options,  warrants,
securities or rights survive beyond the Closing Date.

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     3.2 Earn-Out Consideration.

         (a) The Earn-Out  Consideration shall consist, in the aggregate,  of up
to CDN  $11,000,000.  Such  Earn-Out  Consideration  shall consist of 50% of the
nonrefundable   cash  or   non-cash   property   consideration   ("Nonrefundable
Consideration")  actually  received by Vaxis or Cellegy  after the Closing  Date
pursuant to:

               (i)  commercial  sales of the products  currently being developed
                    by Vaxis or derived  therefrom or sales of other products by
                    or on behalf of Cellegy or Vaxis  that would  constitute  an
                    infringement of the patents and patent  applications (to the
                    extent that patents  ultimately issue on such  applications)
                    that  Cellegy  acquires  from  Vaxis  under  this  Agreement
                    ("Products"); or

               (ii) the  sale,  license  or  assignment  of  patents  or  patent
                    applications  that  Cellegy  acquires  from Vaxis under this
                    Agreement  or  the  transactions   contemplated  hereby  (or
                    technology  covered by the patents  and patent  applications
                    that Cellegy acquires from Vaxis under this Agreement or the
                    transactions contemplated hereby) ("Patents").

                    The Products and Patents are more  particularly set forth on
                    Exhibit 3.1(b) hereto.

         (b) The obligation to pay the Earn-Out  Consideration  shall survive in
the  event of the sale of all or any  portion  of  Cellegy's  right,  title  and
interest  with  respect  to the  Products  or Patents  to a third  party,  or in
connection  with a sale  of all or  substantially  all of  Vaxis'  or  Cellegy's
business  (whether by merger,  sale of assets or  otherwise)  and Cellegy  shall
require,  as a condition  of such sale,  that any  acquirer  of the  Products or
Patents to be bound by the terms of this  Agreement  relating  to payment of the
Earn-Out  Consideration;  but the  receipt of  consideration  from any such sale
transaction shall not constitute Nonrefundable Consideration.

         (c) If the Nonrefundable  Consideration received by Vaxis or Cellegy is
other than cash,  Cellegy may at its sole option pay the Earn-Out  Consideration
as cash with a value (determined in good faith by Cellegy) equal to the non-cash
consideration received.

         (d) For greater certainty,  Nonrefundable  Consideration shall include,
but shall not be limited to:

               (i)  upfront money,  option payments,  milestone  payments or any
                    other  form  of  cash  or  non-cash  property  consideration
                    received from any licensee of the Products or Patents;

               (ii) royalty  payments  received  by  Vaxis or  Cellegy  from any
                    licensee  with  respect  to its  sales  of the  Products  or
                    license of the Patents; and

                                      -10-
<PAGE>

              (iii) operating  earnings  generated  by the  Products  if Cellegy
                    commercializes the Products anywhere in the world.

         (e) Where a product of Cellegy  (such as  Anogesic) is  prescribed  for
indications that are not covered by the patents and patent  applications (to the
extent that patents  ultimately  issue with respect to such  applications)  that
Cellegy is acquiring from Vaxis pursuant to this Agreement, but may also be used
for  conditions  that are so covered  ("off-label  sales"),  if Cellegy,  in its
reasonable  discretion,  can determine the amount of such  off-label  sales with
reasonable  precision  using a reputable  published  source  selected by Cellegy
(such as IMS,  NDTI, or Scott Levin),  then the amount of such  off-label  sales
that can be so determined  shall also be treated as "Product" sales with respect
to which Earn-Out Consideration is payable.

         (f) The Earn-Out  Consideration  will be paid, at Cellegy's  option, in
the form of cash, Cellegy Common Stock or a combination  thereof.  Payments will
be made  within  60 days  after the end of each  quarter  in which  Cellegy  has
received  Nonrefundable  Consideration.  If payment  is made in  Cellegy  Common
Stock,  it will be based on the Cellegy  Average Price as of the end of any such
calendar quarter. The Earn-Out Consideration will only be calculated and payable
during  the term of seven  (7)  years  from the date of this  Agreement,  and no
payment  will be made  with  respect  to  Nonrefundable  Consideration  received
following expiration of such period.

         (g) Cellegy shall prepare and deliver to each  Stockholder with payment
of the  Earn-Out  Consideration  a statement  showing the amount of the Earn-Out
Consideration for the applicable quarter.

         (h) Cellegy shall use commercially reasonable efforts,  consistent with
Cellegy's other products and opportunities, to develop and commercialize such of
the Products as Cellegy believes have commercial potential.  Notwithstanding the
foregoing,  nothing in this  Agreement or  otherwise  shall  restrict  Cellegy's
ability to operate its business and exercise its business  judgment with respect
to  the  Products  and  other   Intellectual   Property   from  which   Earn-Out
Consideration may be derived.

     3.3 Delivery of Certificates.  At Closing,  each of the Stockholders  shall
deliver certificates representing the Purchased Shares held by such Stockholder,
with properly executed instruments of assignment or transfer.

     3.4 Transfer Taxes; No Fractional Shares.

         (a) If any  certificates  for any shares of Cellegy Common Stock are to
be issued in a name  other  than that in which the  Certificate  surrendered  in
exchange  therefor is registered,  it shall be a condition of such exchange that
the person  requesting  such  exchange  shall (i) pay to Cellegy any transfer or
other taxes required by reason of the issuance of  certificates  for such shares
of Cellegy  Common Stock in a name other than that of the  registered  holder of
the  Certificate  surrendered or (ii) establish to the  satisfaction  of Cellegy
that such tax has been paid or is not applicable.

                                      -11-
<PAGE>

         (b) No  fractional  shares  of  Cellegy  Common  Stock  shall be issued
pursuant to the Transaction.

     3.5 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Blake, Cassels & Graydon LLP,
20th Floor, 45 O'Connor Street, Ottawa, Ontario at 9:00 a.m., local time, on the
first  Business Day (the "Closing  Date") after which all of the  conditions set
forth in Article  VIII hereof are  satisfied  or waived,  or at such other date,
time and place as Cellegy and Vaxis shall agree.

     3.6  Supplementary  Action.  If at any time after the Closing,  any further
assignments  or assurances in law or any other things are necessary or desirable
to vest or to perfect or confirm or record in Vaxis the title to any property or
rights of Vaxis, or otherwise to carry out the provisions of this Agreement, the
officers and directors of Vaxis are hereby authorized and empowered on behalf of
Vaxis to execute and deliver any and all things  necessary  or proper to vest or
to perfect or confirm title to such  property or rights,  and otherwise to carry
out the purposes and provisions of this Agreement.

     3.7 Escrow.

         (a)  Cellegy   will   withhold   the  stock   portion  of  the  Initial
Consideration  and  deposit  with  the  Escrow  Agent,  as  soon  as  reasonably
practicable  after the  Closing,  the  certificates  for the  Escrow  Shares (as
defined below). The Escrow Shares will be issued in the name of the Stockholders
but withheld from the Cellegy  Common Stock to be delivered to  Stockholders  at
the  Closing.  For this  purpose,  "Escrow  Shares"  means all of the  shares of
Cellegy Common Stock that are included in the Initial Consideration.  Any shares
of Cellegy  Common Stock or other equity  securities  issued or  distributed  by
Cellegy   (including   shares  issued  upon  a  stock  split,   stock  dividend,
recapitalization  or other similar event) in respect of Escrow Shares shall also
be  withheld  in the  Escrow  Funds and shall  also be  considered  to be Escrow
Shares.  In  addition,  the full amount of any  Earn-Out  Consideration  paid or
payable  with  respect to the period  ending  forty-eight  (48) months after the
Closing Date will be withheld by Cellegy and deposited  with the Escrow Agent to
be held as part of the Escrow. Any Earn-Out Consideration that is deposited into
the Escrow will be referred  to herein as the "Escrow  Earn-Out  Consideration."
The Escrow  Shares and any Escrow  Earn-Out  Consideration  may be  collectively
referred to herein as the "Escrow  Funds." Cash  dividends  on Escrow  Shares or
interest on any cash Escrow Earn-Out  Consideration shall be added to the Escrow
Funds and shall not be  distributed  to the record holders of such Escrow Funds.
Cellegy will hold the  certificates  representing  such Escrow Funds as security
for the Stockholders'  indemnification  obligations for Damages under Article X.
Except as may be expressly  provided otherwise in this Agreement with respect to
breach of a Stockholder's  representations  and warranties under Article XI, the
payment of any Escrow Funds in satisfaction of any  indemnification  obligations
under  Article X shall be made in proportion to the Escrow Funds (each valued at
the Cellegy  Average  Price Per Share as of the date that such Escrow Shares are
forfeited to satisfy such indemnity  obligations)  held for each  Stockholder in
the Escrow Fund.

                                      -12-
<PAGE>

         (b) The Escrow Funds will be released to the Stockholders by the Escrow
Agent on the following  release dates ("Escrow Release  Dates"),  subject to any
Escrow Funds being withheld pursuant to Section 10.2(b):

               (i)  the Escrow  Shares will be released  twelve (12) months from
                    the Closing Date in the case of Stockholders  other than the
                    Founders and  eighteen  (18) months from the Closing Date in
                    the case of the Founders; and

               (ii) the  Escrow   Earn-Out   Consideration   will  be   released
                    forty-eight (48) months from the Closing Date.

     3.8 Non-Resident of Canada  Stockholder;  Section 116  Requirements.  On or
before the Closing,  each  non-resident  Stockholder  shall take all  reasonable
steps to obtain and deliver to Cellegy a  certificate  issued by the Minister of
National Revenue under subsection 116(2) of the Income Tax Act (Canada).

         (a) If a  certificate  is so  delivered  to  Cellegy  on or before  the
Closing   Date,   Cellegy  shall  be  entitled  to  withhold  from  the  Initial
Consideration  twenty-five  percent  (25%) of the amount,  if any, by which such
non-resident  Stockholder's  proportionate  share of the  Initial  Consideration
exceeds the certificate  limit as defined in subsection 116(2) of the Income Tax
Act (Canada) and fixed by the Minister of National Revenue in such certificate

         (b) If a  certificate  is not so  delivered to Cellegy on or before the
Closing   Date,   Cellegy  shall  be  entitled  to  withhold  from  the  Initial
Consideration an amount equal to twenty-five  percent (25%) of such non-resident
Stockholder's proportionate share of the Initial Consideration.

         (c) If  Cellegy  has  withheld  any  amount  under  the  provisions  of
paragraphs (a) or (b) above and a non-resident  Stockholder delivers to Cellegy,
after the  Closing  and  within 29 days  after the end of the month in which the
Closing occurs,  a certificate  issued by the Minister of National Revenue under
subsection 116(2) or 116(4), as the case may be, of the Income Tax Act (Canada),
Cellegy shall:

              (i) if such certificate was issued under subsection  116(2) of the
Income Tax Act  (Canada),  pay  forthwith  to the Receiver  General  twenty-five
percent  (25%) of the amount,  if any, by which the  non-resident  Stockholder's
proportionate share of the Initial  Consideration  exceeds the certificate limit
fixed in such  certificate,  and the amount so paid shall be credited as payment
on account of the Initial Consideration; and

              (ii) pay forthwith to the non-resident Stockholder any amount that
Cellegy  has  withheld  and is not  required to pay to the  Receiver  General in
accordance with  subparagraph  (i) above (and which is not otherwise  constitute
Escrow Funds), and the amount so paid shall be credited as payment on account of
the Initial Consideration.

                                      -13-
<PAGE>

         (d) If  Cellegy  has  withheld  any  amount  under  the  provisions  of
paragraphs (a) or (b) above and no certificate  has been delivered to Cellegy by
the non-resident  Stockholder in accordance with the provisions of paragraph (c)
above,  such withheld amount shall be paid by Cellegy to the Receiver General on
the 30th day after the end of the month in which the  Closing  occurs on account
of  Cellegy's  liability  pursuant  to  subsection  116(5) of the Income Tax Act
(Canada),  and the amount so paid shall be credited as payment on account of the
Purchase Price.

     All amounts  withheld by Cellegy in  accordance  with this Section shall be
paid to and held by the Escrow Agent.  The applicable  non-resident  Stockholder
shall pay any expenses of the Escrow Agent in connection with this Section.

         3.9 Securities Laws  Compliance.  The parties to this Agreement  intend
that Cellegy shall issue the shares of Cellegy Common Stock  hereunder  pursuant
to a  private  placement  under  Section  4(2)  of the  Securities  Act  (and/or
Regulation  D  or  Regulation  S  promulgated  under  the  Securities  Act)  and
applicable state  securities  laws, and under Sections  72(1)(j) and 93(1)(d) of
Securities Act (Ontario).  The shares of Cellegy Common Stock issuable  pursuant
to this Agreement shall constitute "restricted securities" within the meaning of
the Securities  Act. The  certificates  for Cellegy Common Stock to be issued in
the Transaction shall bear appropriate  legends to identify such shares as being
restricted  under  the  Securities  Act,  and,  if  applicable,  to  notice  the
restrictions on transfer set forth in this  Agreement.  Vaxis shall use its best
efforts  to  furnish  Cellegy  with all  information  concerning  Vaxis  and the
Stockholders as Cellegy may reasonably  request in connection with  establishing
the  availability  of federal and state  private  placement  exemptions  for any
action contemplated by this Section.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VAXIS

     Except as set  forth in the  corresponding  section  or  subsection  of the
disclosure  schedule  delivered  to Cellegy at or before the  execution  of this
Agreement ("Disclosure  Schedule"),  Vaxis represents and warrants to Cellegy as
follows:

     4.1 Organization.  Vaxis is a corporation duly organized,  validly existing
and in good standing under the OBCA and has the corporate  power to carry on its
business as it is now being  conducted.  Vaxis is duly qualified to do business,
and is in good standing (to the extent the concept of good standing exists),  in
each  jurisdiction  where the  character of its  properties  owned or held under
lease or the nature of its activities makes such qualification necessary.  Vaxis
does not have any wholly-owned or partially-owned Subsidiaries.

     4.2 Capitalization.

         (a) As of the  date  hereof,  the  authorized  share  capital  of Vaxis
consists of an unlimited  number of Vaxis Common Shares and unlimited  number of
preferred shares in the capital of Vaxis ("Vaxis Preferred  Shares").  As of the
date  of  this  Agreement,   2,111,269  Vaxis  Common  Shares  were  issued  and
outstanding,  no Vaxis Preferred Shares were issued and outstanding, no warrants
to acquire Vaxis Common Shares ("Vaxis Warrants") and no stock

                                      -14-
<PAGE>

options  to acquire  Vaxis  Common  Shares  (the  "Vaxis  Stock  Options")  were
outstanding.  All issued and outstanding Vaxis Common Shares are validly issued,
fully  paid,  nonassessable  and free of  pre-emptive  rights or similar  rights
created by  statute,  the  Articles of  Incorporation  or Bylaws of Vaxis or any
agreement to which Vaxis is a party or by which Vaxis is bound.

         (b) Except as set forth above or pursuant to Vaxis Benefit Plans, there
are not now, and at the Closing  there will not be, any shares in the capital of
Vaxis issued or  outstanding  or any options,  warrants,  subscriptions,  calls,
rights,  convertible  securities or other  agreements or commitments  obligating
Vaxis to  issue,  transfer  or sell any  shares in its  capital.  As of the date
hereof, no bonds,  debentures,  notes or other indebtedness  having the right to
vote (or  convertible  into or exercisable  for  securities  having the right to
vote) on any matters on which  Stockholders  may vote  ("Voting  Debt") of Vaxis
were issued or  outstanding,  nor will there be any issued or outstanding at the
Closing. Except as provided in this Agreement, after the Closing Vaxis will have
no obligation to issue,  transfer or sell any shares in its capital  pursuant to
any  employee  benefit  plan or  otherwise.  There are no voting  trust or other
agreements  or  understandings  to which  Vaxis is a party  with  respect to the
voting of the capital of Vaxis.  Vaxis is not required to redeem,  repurchase or
otherwise  acquire shares of Vaxis as a result of the transactions  contemplated
by this  Agreement.  Immediately  after the  Closing,  there  will be no option,
warrant, call, right or agreement obligating Vaxis to issue, deliver or sell, or
cause to be issued,  delivered or sold,  any Vaxis  Common  Shares or any Voting
Debt,  or  obligating  Vaxis to grant,  extend,  or enter into any such  option,
warrant, call, right or agreement.

     4.3 Authority Relative to this Agreement.  Vaxis has the corporate power to
enter  into this  Agreement  and to carry  out its  obligations  hereunder.  The
execution and delivery of this Agreement by Vaxis and the  consummation by Vaxis
of the Transaction  have been duly authorized by Vaxis' Board of Directors,  and
no other corporate or stockholder proceedings on the part of Vaxis are necessary
to  approve  this  Agreement  or  the  transactions  contemplated  hereby.  This
Agreement  has  been  duly and  validly  executed  and  delivered  by Vaxis  and
constitutes the valid and binding agreement of Vaxis,  enforceable against Vaxis
in accordance with its terms,  subject to applicable  bankruptcy,  insolvency or
other  similar laws  relating to  creditors'  rights and general  principles  of
equity.

     4.4  Consents  and  Approvals;   No   Violations.   Except  for  applicable
requirements  of the  Securities  Act and the Securities Act (Ontario) no filing
with,  and no  permit,  authorization,  consent  or  approval  of, any public or
governmental body or authority is necessary for the consummation by Vaxis of the
transactions contemplated by this Agreement.  Neither the execution and delivery
of this Agreement by Vaxis,  nor the  consummation by Vaxis of the  Transaction,
nor  compliance by Vaxis with any of the provisions  hereof,  will (a) result in
any breach of the Articles of  Incorporation or Bylaws of Vaxis, (b) result in a
violation  or breach of, or  constitute  (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
acceleration or change in the award,  grant,  vesting or  determination)  under,
require the consent of any third  party  under,  or give rise to creation of any
Encumbrance upon any of the respective  properties or assets of Vaxis under, any
of the terms,  conditions or provisions of any note, bond, mortgage,  indenture,
deed of  trust,  license,  contract,  lease,  agreement,  arrangement  or  other
instrument  or  obligation  to which Vaxis is a party or by which any of them or
any of their  properties or assets may be bound or (c) violate any order,  writ,

                                      -15-
<PAGE>

injunction,  decree,  statute,  rule or regulation applicable to Vaxis or any of
its properties or assets.  No vote of  Stockholders is necessary to approve this
Agreement and the transactions contemplated hereby.

     4.5 Financial Statements.

         (a) Vaxis has delivered to Cellegy copies of its audited balance sheets
as of October 31, 1999 and October 31, 2000, and its unaudited  balance sheet as
of September 30, 2001 (such balance sheets  referred to as the "Balance  Sheets"
and September 30, 2001 referred to as the "Balance  Sheet Date") and the related
audited  combined  statements  of  operations  and  cash  flows  for each of the
one-year periods ended October 31, 1999 and October 31, 2000, respectively,  and
the related unaudited  combined  statements of operations and cash flows for the
nine  month  period  ended  September  30,  2001  (collectively,  the  Financial
Statements").  The Financial  Statements,  including  the related  schedules and
notes thereto,  have been prepared in accordance with Canadian GAAP applied on a
consistent basis throughout the periods indicated and consistent with each other
(subject, in the case of unaudited statements, to normal audit adjustments which
would not in the  aggregate  be  material in amount or effect and the absence of
any notes  thereto).  The  Financial  Statements  fairly  present the  financial
position of Vaxis as of the dates thereof, and the results of operations and the
changes in cash flows of Vaxis for the respective periods set forth therein.

         (b) The books,  records and accounts of Vaxis (i) have been  maintained
in accordance  with good  business  practices on a basis  consistent  with prior
years,  (ii) are stated in reasonable  detail and  accurately and fairly reflect
the  transactions  and  dispositions of the assets of Vaxis and (iii) accurately
and fairly reflect the basis for the Financial Statements. Vaxis has devised and
maintains  a system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurances  that (i)  transactions  are executed in accordance  with
management's  general  or  specific  authorization,  and (ii)  transactions  are
recorded as  necessary  (A) to permit  preparation  of financial  statements  in
conformity  with  Canadian  GAAP  or  any  other  criteria  applicable  to  such
statements and (B) to maintain accountability for assets.

     4.6 Absence of Certain  Changes or Events.  Except as  disclosed in Section
4.6 of the  Disclosure  Schedule,  since  the  Balance  Sheet  Date,  Vaxis  has
conducted its business in the ordinary course consistent with past practice, and
there has not been with respect to Vaxis any:

         (a) material adverse change in the business of Vaxis;

         (b) amendment or change in the Articles of  Incorporation  or Bylaws of
Vaxis;

         (c)  incurrence,  creation or  assumption by Vaxis of (i) any mortgage,
deed  of  trust,  security  interest,  pledge,  lien,  title  retention  device,
collateral  assignment,  claim, charge,  restriction or other Encumbrance of any
kind on any of the assets or  properties  of Vaxis;  or (ii) any  obligation  or
liability or any indebtedness for borrowed money;

         (d) offer,  issuance or sale of any debt or equity securities of Vaxis,
or any  options,  warrants or other  rights to acquire  from Vaxis,  directly or
indirectly, any debt or equity

                                      -16-
<PAGE>

securities of Vaxis (except  options  granted in the ordinary  course in amounts
and with terms consistent with Vaxis' past practices and reflected in the option
figures set forth in Section 4.2 above);

         (e)  payment or  discharge  by Vaxis of any  security  interest,  lien,
claim,  or  Encumbrance  of any kind on any asset or property  of Vaxis,  or the
payment or discharge of any  liability  that was not either shown on the Balance
Sheets or incurred in the ordinary  course of Vaxis'  business after the Balance
Sheet Date in an amount not in excess of $25,000 for any single  liability  to a
particular creditor;

         (f)  purchase,  license,  sale,  assignment  or  other  disposition  or
transfer, or any agreement or other arrangement for the purchase, license, sale,
assignment or other disposition or transfer, of any of the assets, properties or
goodwill of Vaxis  other than a purchase,  license,  sale,  assignment  or other
disposition or transfer (or agreement  therefor) made in the ordinary  course of
Vaxis'  business that does not involve any transfer of title of, or an exclusive
license to, or the creation of any  Encumbrance  on, any  product,  invention or
proprietary technology of Vaxis;

         (g) damage,  destruction  or loss of any property or asset,  whether or
not covered by insurance, having a Material Adverse Effect on Vaxis;

         (h)  declaration,  setting  aside or payment of any dividend on, or the
making of any other  distribution in respect of, shares in the capital of Vaxis,
any split,  combination or recapitalization of shares in the capital of Vaxis or
any direct or indirect  redemption,  purchase or other acquisition of any shares
in the capital of Vaxis or any change in any rights, preferences,  privileges or
restrictions of any outstanding security of Vaxis;

         (i) change or increase in the compensation payable or to become payable
to any of the  officers,  directors,  or  employees  of  Vaxis,  or any bonus or
pension,  insurance or other benefit payment or arrangement  (including  without
limitation stock awards, stock option grants, stock appreciation rights or stock
option grants) made to or with any of such officers,  employees or agents except
in connection with normal employee salary or performance reviews or otherwise in
the ordinary course of Vaxis' business;

         (j) change with  respect to the  management,  supervisory  or other key
personnel of Vaxis;

         (k)  obligation or liability  incurred by Vaxis to any of its officers,
directors  or  stockholders  except for normal and  customary  compensation  and
expense  allowances  payable  to  officers  in the  ordinary  course  of  Vaxis'
business;

         (l) making by Vaxis of any loan, advance or capital contribution to, or
any investment in, any officer,  director or stockholder of Vaxis or any firm or
business  enterprise in which any such person had a direct or indirect  material
interest at the time of such loan, advance, capital contribution or investment;

         (m)  entering  into,  amendment  of,  relinquishment,   termination  or
non-renewal by Vaxis of any contract,  lease,  transaction,  commitment or other
right or obligation other than in

                                      -17-
<PAGE>

the  ordinary  course of its  business  or any  written  or oral  indication  or
assertion  by the other  party  thereto of any  material  problems  with  Vaxis'
services or performance under such contract, lease,  transaction,  commitment or
other right or  obligation or its desire to so amend,  relinquish,  terminate or
not renew any such contract,  lease,  transaction,  commitment or other right or
obligation;

         (n) assertion by any third party against Vaxis of any complaint  (where
the amounts  involved  exceed $25,000 either  individually  or in the aggregate)
against Vaxis;

         (o) entering  into by Vaxis of any  transaction,  contract or agreement
that by its terms requires or  contemplates  a current  and/or future  financial
commitment, expense (inclusive of overhead expense) or obligation on the part of
Vaxis involving in excess of $25,000 or that is not entered into in the ordinary
course of Vaxis's  business,  or the conduct of any business or operations other
than in the ordinary course of Vaxis's business;

         (p) license,  transfer or grant of a right under any Vaxis Intellectual
Property  Rights,  other  than  those  licensed,  transferred  or granted in the
ordinary course of Vaxis' business consistent with its past practices; or

         (q) agreement or arrangement made by Vaxis to take any action which, if
taken before the date of this Agreement,  would have made any  representation or
warranty of Vaxis set forth in Article IV of this Agreement  untrue or incorrect
as of the date when made.

     4.7  No  Undisclosed  Liabilities.  Vaxis  does  not  have  any  liability,
indebtedness,  obligation, expense, claim, guarantee or endorsement of any type,
whether  accrued,  absolute,  contingent,  matured,  unmatured  or other,  which
individually  or in the  aggregate  (i) has not been  reflected  in the  Balance
Sheets,  or (ii) has not arisen in the ordinary  course of Vaxis' business since
the Balance Sheet Date,  consistent  with past  practices and does not reflect a
material change to the business (as previously conducted), results of operations
or financial condition of Vaxis.

     4.8 Litigation.  As of the date of this Agreement:  (i) there is no action,
suit,   judicial  or   administrative   proceeding,   hearing,   arbitration  or
investigation  pending  or, to the  knowledge  of Vaxis,  threatened  against or
involving  Vaxis,  or any of their  properties  or  rights,  before  any  court,
arbitrator,  or administrative or governmental  body; (ii) there is no judgment,
decree,  injunction,  rule  or  order  of  any  court,  Governmental  Authority,
commission, agency, instrumentality or arbitrator, or agreement or memorandum of
understanding  outstanding against Vaxis; and (iii) Vaxis is not in violation of
any term of any judgments,  decrees,  injunctions or orders outstanding  against
them.

     4.9 Contracts.

         (a) Each of the  contracts,  instruments,  mortgages,  notes,  security
agreements, leases, agreements or understandings, to which Vaxis is a party that
relates to or affects the assets or operations of Vaxis or to which Vaxis or its
assets or operations  may be bound or subject is a valid and binding  obligation
of Vaxis  and in full  force  and  effect  with  respect  to Vaxis  and,  to the

                                      -18-
<PAGE>

knowledge of Vaxis,  with respect to all other  parties  thereto.  Except to the
extent that the consummation of the transactions  contemplated by this Agreement
may  require  the consent of third  parties,  there are no existing  defaults by
Vaxis thereunder or, to the knowledge of Vaxis, by any other party thereto;  and
no event of default has occurred,  and no event, condition or occurrence exists,
that (whether with or without notice,  lapse of time, the declaration of default
or other similar event) would constitute a default by Vaxis thereunder.  Section
4.9(a) of the Disclosure  Schedule lists all consents of third parties  required
for the consummation of the transactions contemplated by this Agreement.

         (b)  Section  4.9(b) of the  Disclosure  Schedule  lists the  following
contracts and other agreements to which Vaxis is a party:

                (i) any agreement (or group of related agreements) for the lease
                    of  personal  property to or from any person  providing  for
                    lease payments in excess of $25,000 per annum;

               (ii) any agreement concerning a partnership or joint venture;

              (iii) any agreement (or group of related  agreements)  under which
                    it  has  created,  incurred,   assumed,  or  guaranteed  any
                    indebtedness  for borrowed money,  or any capitalized  lease
                    obligation or under which it has imposed a security interest
                    on any of its assets, tangible or intangible;

               (iv) any agreement concerning  confidentiality or noncompetition,
                    to which Vaxis or any of the Founders are a party;

                (v) any  agreement  with  any  of  the  Stockholders  and  their
                    affiliates;

               (vi) any profit  sharing,  stock option,  stock  purchase,  stock
                    appreciation,  deferred  compensation,  severance,  or other
                    material plan or arrangement  for the benefit of its current
                    or former directors, officers, or employees;

              (vii) any  agreement  or offer  letter for the  employment  of any
                    individual on a full-time,  part-time,  consulting, or other
                    basis providing annual  compensation in excess of $25,000 or
                    providing severance benefits;

             (viii) any  agreement  under which it has  advanced or loaned any
                    amount  to any of its  directors,  officers,  and  employees
                    outside the ordinary course of business;

               (ix) any agreement  under which Vaxis is performing  services for
                    customers  or clients  providing  for  payments in excess of
                    $25,000

                                      -19-
<PAGE>

                    per annum or any  agreement  under which Vaxis is  receiving
                    services  providing  for  payments  in excess of $25,000 per
                    annum;

                (x) any license  agreement  relating  to any Vaxis  Intellectual
                    Property;

               (xi) any license agreement relating to any intellectual  property
                    of another Person;

              (xii) any other  agreement,  contract,  commitment  or  instrument
                    that is material to the business of Vaxis or that involves a
                    future commitment by Vaxis in excess of $25,000; and

             (xiii) any agreement under which the consequences of a default or
                    termination could have a Material Adverse Effect.

         (c) Vaxis has  delivered to Cellegy a correct and complete copy of each
agreement  listed in Section  4.9(b) of the  Disclosure  Schedule  and a written
summary  setting forth the terms and conditions of each oral agreement  referred
to in  Section  4.9(b) of the  Disclosure  Schedule.  With  respect to each such
agreement: (A) the agreement is legal, valid, binding,  enforceable, and in full
force and effect; (B) the agreement will continue to be legal,  valid,  binding,
enforceable,  and in full  force and effect on  identical  terms  following  the
consummation of the transactions  contemplated hereby; (C) no party is in breach
or default,  and no event has occurred  which with notice or lapse of time would
constitute  a  breach  or  default,  or  permit  termination,  modification,  or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.

         (d) Vaxis has no agreement or plan, including any stock incentive plan,
stock  appreciation  rights plan,  restricted stock plan or stock purchase plan,
any of the benefits of which will be  increased,  or the vesting of the benefits
of which  will be  accelerated,  by the  occurrence  of any of the  transactions
contemplated by this Agreement or the value of any of the benefits of which will
be  calculated  on the  basis of any of the  transactions  contemplated  by this
Agreement.

         (e)  Vaxis  has no  agreements  or  arrangements  to sell or  otherwise
dispose of, or lease,  acquire or otherwise  invest in, any  property,  lines of
business or other assets, other than agreements and arrangements entered into in
the ordinary course of Vaxis' business.

     4.10 Employee Benefit Plans.

         (a) Section 4.10 of the  Disclosure  Schedule set forth a complete list
of the Benefit Plans.

         (b) Current and complete  copies of all written Benefit Plans or, where
oral,  written  summaries of the material terms thereof,  have been delivered or
made  available to Cellegy  together  with  current and  complete  copies of all
documents relating to the Benefit Plans, including, as applicable,

                                      -20-
<PAGE>

                (i) all documents establishing,  creating or amending any of the
                    Benefit Plans;

               (ii) all trust agreements and funding agreements;

              (iii) all insurance contracts,  investment management  agreements,
                    subscription and participation agreements;

               (iv) all  financial  statements  and  accounting  statements  and
                    reports,  and  investment  reports  for each of the last six
                    years and the three most recent actuarial reports;

                (v) all reports, statements, annual information returns or other
                    returns,   filings  and  material  correspondence  with  any
                    regulatory authority in the last six years;

               (vi) all legal opinions,  consultants' reports and correspondence
                    relating  to the  administration  or funding of any  Benefit
                    Plan or the use of the funds held under such plans;

              (vii) all booklets,  summaries,  manuals and  communications  of a
                    general   nature   distributed  or  made  available  to  any
                    Employees or former employees concerning any Benefit Plans;

             (viii) a copy  of the  most  recent  letter  of  confirmation  of
                    registration of the Pension Plan(s), if any, pursuant to any
                    Laws; and

               (ix) a copy of any  statement  of  investment  policies and goals
                    prepared in respect of the Pension Plans, if any, whether or
                    not such  statement  has  been  filed  with  the  applicable
                    Governmental Authority.

         (c) Except as  disclosed in Section  4.10 of the  Disclosure  Schedule,
each Benefit Plan is, and has been  established,  registered  (where  required),
qualified,  administered and invested,  in compliance with (i) the terms of such
Benefit Plan, (ii) all Laws and (iii) any Collective  Agreements;  and Vaxis has
not received,  in the last six years, any notice from any Person  questioning or
challenging  such compliance  (other than in respect of any claim related solely
to that  Person),  and Vaxis does not have any knowledge of any such notice from
any Person questioning or challenging such compliance beyond the last six years.

         (d) All obligations to or under the Benefit Plans (whether  pursuant to
the terms thereof or any Laws) have been satisfied, and there are no outstanding
defaults or violations  thereunder  by Vaxis or, to the knowledge of Vaxis,  any
default or violation by any other party to any Benefit Plan.

                                      -21-
<PAGE>

         (e) Except as  disclosed in Section  4.10 of the  Disclosure  Schedule,
there  have  been  no  improvements,   increases  or  changes  to,  or  promised
improvements,  increases or changes to, the benefits  provided under any Benefit
Plan.  None  of  the  Benefit  Plans  provide  for  benefit   increases  or  the
acceleration of, or an increase in, funding obligations that are contingent upon
or will be triggered by the entering into of this Agreement or the completion of
the transactions contemplated herein.

         (f) All  employer  or  employee  payments,  contributions  or  premiums
required to be  remitted,  paid to or in respect of each  Benefit Plan have been
paid or remitted in a timely fashion in accordance  with its terms and all Laws,
and no Taxes, penalties or fees are owing or eligible under any Benefit Plan.

         (g) There is no  investigation  by a Governmental  Authority,  or Claim
(other  than  routine  claims for  payment of  benefits)  pending or  threatened
involving  any  Benefit  Plan or their  assets,  and no facts  exist which could
reasonably  be expected to give rise to any such  investigation  or Claim (other
than routine claims for benefits).

         (h) No event has occurred  respecting any registered Benefit Plan which
would result in the revocation of the  registration  of such Benefit Plan (where
applicable)  or entitle any Person  (without the consent of Vaxis) to wind-up or
terminate  any  Benefit  Plan,  in whole or in part,  or which  could  otherwise
reasonably be expected to adversely affect the tax status of any such plan.

         (i) There are no going concern unfounded  actuarial  liabilities,  past
service  unfounded  liabilities or solvency  deficiencies  respecting any of the
Benefit Plans.

         (j) No material  changes  have  occurred in respect of any Benefit Plan
since the date of the most  recent  financial,  accounting,  actuarial  or other
report,  as applicable,  issued in connection with any Benefit Plan, which could
reasonably  be expected  to  adversely  affect the  relevant  report  (including
rendering it misleading in any material respect).

         (k) Vaxis has not received,  or applied for, any payment of surplus out
of any  Benefit  Plan or any  payment in respect of the  demutualization  of the
insurer of any Benefit Plan.

         (l) Except as disclosed in Section 4.10 of the Disclosure Schedule, (i)
Vaxis has not taken any  contribution or premium holidays under any Benefit Plan
and, where so disclosed, Vaxis was entitled under the terms of the Benefit Plan,
applicable Collective Agreements and under all Laws to take such contribution or
premium holidays; and (ii) there have been no withdrawals or transfers of assets
from any Benefit Plan and where so disclosed,  such  withdrawals or transfers of
assets were in accordance  with the terms of such Benefit Plan,  any  applicable
Collective Agreements and all Laws.

         (m) None of the  Benefit  Plans is a Union  Plan or a  "multi-employer"
pension plan or benefit plan as defined under Laws.

                                      -22-
<PAGE>

         (n) All employee data  necessary to administer  each Benefit Plan is in
the  possession  of  Vaxis  and is  complete,  correct  and in a form  which  is
sufficient for the proper  administration of the Benefit Plan in accordance with
its terms and all Laws.

         (o) None of the Benefit Plans,  other than the Pension  Plans,  provide
benefits  beyond  retirement  or other  termination  of service to  Employees or
former  employees or to the  beneficiaries  or dependents of such employees,  or
such  benefits  have  been  properly  accrued  on the  Financial  Statements  in
accordance with Canadian GAAP.

         (p) None of the Benefit Plans require or permit a retroactive  increase
in  premiums  or  payments,  or  require  additional  premiums  or  payments  or
termination of the Benefit Plan or any insurance contract relating thereto,  and
the level of  insurance  reserves,  if any,  under any insured  Benefit  Plan is
reasonable and sufficient to provide for all incurred but unreported Claims.

         (q) Vaxis'  sole  obligation  to or in respect of any Union Plans is to
make monetary  contributions to the Union Plans in the amounts and in the manner
set forth in the Collective Agreements,  if any, disclosed to Cellegy under this
Agreement.

     4.11 Tax Matters.

         (a) Vaxis has duly and timely  prepared all Tax Returns  required to be
prepared by it, has duly and timely  filed its Tax Returns  required to be filed
by it with the appropriate  Governmental  Authority and has duly, completely and
correctly reported all income and all other amounts and information  required to
be reported thereon.

         (b)  Vaxis  has  duly  and  timely  paid  all  Taxes,   including   all
installments  on account of Taxes for the current year, that are due and payable
by it  whether  or not  assessed  by  the  appropriate  Governmental  Authority.
Provision  has been made on the Balance  Sheet for amounts at least equal to the
amount of all Taxes  owing by Vaxis  that are not yet due and  payable  and that
relate to periods ending on or prior to the Closing Date.

         (c) Vaxis has not requested,  offered to enter into or entered into any
agreement  or other  arrangement  or  executed  any waiver  providing  for,  any
extension of time within which (i) to file any Tax Return covering any Taxes for
which Vaxis is or may be liable;  (ii) to file any  elections,  designations  or
similar  filings  relating to Taxes for which  Vaxis is or may be liable;  (iii)
Vaxis is required  to pay or remit any Taxes or amounts on account of Taxes;  or
(iv) any  Governmental  Authority may assess or collect Taxes for which Vaxis is
or may be liable.

         (d) All Canadian federal and provincial  income,  sales and capital tax
liabilities of Vaxis have been assessed by the relevant  taxing  authorities and
notices of assessment have been issued to it by all relevant taxing  authorities
for all taxation  years prior to and  including  the taxation year ended October
31, 2000.

                                      -23-
<PAGE>

         (e)  There are no  proceedings,  investigations,  audits or Claims  now
pending or, to the knowledge of Vaxis,  threatened,  against Vaxis in respect of
any Taxes and there are no matters  under  discussion,  audit or appeal with any
Governmental Authority relating to Taxes.

         (f)  Vaxis has duly and  timely  withheld  the  amount of all Taxes and
other deductions required by law to be withheld from any amount paid or credited
by it to or for the account or benefit of any Person,  including any  Employees,
officers  or  directors  and any  non-resident  Person,  and has duly and timely
remitted  to the  appropriate  Governmental  Authority,  such  Taxes  and  other
deductions required by law to be remitted.

         (g) Except pursuant to this Agreement or as  specifically  disclosed in
writing to Cellegy,  for  purposes  of the Income Tax Act  (Canada) or any other
applicable  Tax  statute,  except  for the  Stockholders  no  Person or group of
Persons has ever acquired or had the right to acquire control of Vaxis.

         (h) None of Sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the Income
Tax Act (Canada),  or any  equivalent  provision of the Tax  legislation  of any
province or any other  jurisdiction,  have applied or will apply to Vaxis at any
time up to and including the Closing Date.

         (i) Vaxis has not acquired  property  from a non-Arm's  Length  Person,
within the meaning of the Income Tax Act (Canada), for consideration,  the value
of  which is less  than  the fair  market  value  of the  property  acquired  in
circumstances  which could  subject it to a liability  under  Section 160 of the
Income Tax Act (Canada).

         (j) For all transactions between Vaxis and any non-resident Person with
whom Vaxis was not dealing at Arm's  Length  during a taxation  year  commencing
after 1998 and ending on or before the Closing Date,  Vaxis has made or obtained
records or documents that meet the  requirements of paragraphs  247(4)(a) to (c)
of the Income Tax Act (Canada).

         (k) Vaxis is duly  registered  under  subdivision  (d) of Division V of
Part IX of the Excise Tax Act  (Canada)  with  respect to the goods and services
tax and harmonized sales tax and its registration number is 886332568.

         (l)  The  only  reserves  under  the  Income  Tax Act  (Canada)  or any
equivalent provincial statute to be claimed by Vaxis for the taxation year ended
immediately  prior to the  acquisition  of control by Cellegy are  disclosed  in
Section 4.11 of the Disclosure Schedule.

         (m) Vaxis has not filed any elections,  designations or similar filings
which will be applicable for any period ending after the Closing Date.

         (n)  Vaxis has duly and  timely  collected  the  amount of any sales or
transfer  taxes,  including  any  goods  and  services,   harmonized  sales  and
provincial  sales taxes,  required by Law to be collected by it and has duly and
timely remitted to the appropriate Governmental Authority such sales or transfer
taxes required by Law to be remitted by it.

                                      -24-
<PAGE>

         (o)  Cellegy has been  provided  with copies of all Tax Returns and all
communications  to or from any Governmental  Authority  relating to the Taxes of
Vaxis,  to the  extent  relating  to  periods  or events in respect of which any
Governmental  Authority  may by Law assess or  otherwise  impose any such Tax on
Vaxis.

     4.12 Compliance With Applicable Law. Vaxis holds all licenses,  franchises,
permits, variances,  exemptions,  orders, approvals and authorizations necessary
for the lawful  conduct of its business  under and pursuant to, and the business
of Vaxis is not being  conducted in material  violation of, any provision of any
federal, provincial, local or foreign statute, law, ordinance, rule, regulation,
judgment,  decree, order,  concession,  grant,  franchise,  permit or license or
other Governmental Authorization or approval applicable to Vaxis.

     4.13 Subsidiaries. Vaxis has no subsidiaries.

     4.14. No Bankruptcy  Proceedings.  There is no  Bankruptcy  Proceeding  (as
defined below) pending  against  Vaxis,  and to the best knowledge of Vaxis,  no
other person has threatened to commence any such Bankruptcy  Proceeding  against
Vaxis.  Vaxis is not  Insolvent (as defined  below),  and Vaxis has no reason to
believe that it may become Insolvent in the ordinary course of its business. For
purposes of this  Section,  a Bankruptcy  Proceeding  shall mean and include any
action,  suit or  judicial or  administrative  proceeding  under any  applicable
bankruptcy,  fraudulent  conveyance or insolvency law, including but not limited
to,  any  such  action,  suit or  judicial  or  administrative  proceeding:  (i)
involving  the filing of a voluntary  or  involuntary  bankruptcy  petition,  or
petition  from relief from Claims of creditors,  with respect to Vaxis;  (ii) in
which it is alleged that Vaxis is insolvent; or (iii) seeking the liquidation of
Vaxis, the appointment of a receiver or trustee over all or substantially all of
the assets of Vaxis,  or the  composition  or assignment of all or a substantial
portion of the assets of Vaxis for the benefit of the  creditors  of Vaxis . For
purposes of this  Section,  Vaxis shall be  "Insolvent"  if it is generally  not
paying,  or is or will be unable  or lacks  the means to pay,  its debts as they
become in the ordinary course of its business.

     4.15 Labor and Employment Matters.

         (a) Section 4.15 of the Disclosure  Schedule sets forth a complete list
of the Employees,  together with their titles,  service dates and material terms
of  employment,  including  current  wages,  salaries  or  hourly  rate  of pay,
benefits,  vacation  entitlement,  commissions  and bonus  (whether  monetary or
otherwise) or other material  compensation  paid since the beginning of the most
recently  completed fiscal year or payable to each such Employee,  the date upon
which each such term of employment  became  effective if it became  effective in
the 12 month period prior to the date of this  Agreement and the date upon which
each such Employee was first hired by Vaxis. Except as disclosed in Section 4.15
of the Disclosure Schedule, no Employee is on short-term or long-term disability
leave,  parental leave,  extended absence or receiving  benefits pursuant to the
Workplace  Safety and Insurance Act (Ontario) or similar  workers'  compensation
legislation in other jurisdictions.

         (b) Except for the Employment  Contracts  listed in Section 4.15 of the
Disclosure Schedule,  there are no Employment Contracts which are not terminable
on the giving

                                      -25-
<PAGE>

of reasonable  notice in accordance  with applicable law, nor are any management
agreements,  retention  bonuses or  Employment  Contracts  providing for cash or
other  compensation  or  benefits  upon  the  consummation  of the  transactions
contemplated by this Agreement.

         (c) Except for the Benefit Plans or as disclosed in Section 4.15 of the
Disclosure  Schedule,  there are no  employment  policies  or  plans,  which are
binding upon Vaxis.

         (d) (i) Vaxis has been and are being operated in full  compliance  with
all Laws relating to employees,  including  employment  standards,  Occupational
Health and Safety Laws, workers  compensation,  human rights,  labour relations,
pay equity and  employment  equity.  Vaxis has complied with and posted plans as
required under applicable pay equity legislation. There have been no Claims nor,
to the  knowledge  of Vaxis,  are there any  threatened  complaints  under  such
employment-related Laws against Vaxis.

         (e) There are no Claims or  complaints  nor, to the knowledge of Vaxis,
are there any  threatened  Claims or  complaints,  against Vaxis pursuant to any
Laws relating to Employees, including employment standards, human rights, labour
relations,  Occupational  Health and Safety  Laws,  worker's  compensation,  pay
equity or  employment  equity.  To the  knowledge of Vaxis  nothing has occurred
which  might lead to a Claim or  complaint  against  Vaxis  under any such Laws.
There are no outstanding decisions, orders or settlements or pending settlements
which place any obligation upon Vaxis to do or refrain from doing any act.

         (f) All current  assessments  under the Workplace  Safety and Insurance
Act  (Ontario)  and  any  similar  workers  compensation  legislation  in  other
provinces  in  relation  to Vaxis and all of their  respective  contractors  and
subcontractors  have been paid or accrued and Vaxis has not been  subject to any
special or penalty assessment under such legislation which has not been paid.

         (g) Vaxis has  previously  made  available  to  Cellegy  for review all
inspection  reports under the  Occupational  Health and Safety Act (Ontario) and
Workplace  Safety and Insurance Act  (Ontario)  relating to Vaxis.  There are no
outstanding  inspection orders made under the Occupational Health and Safety Act
(Ontario)  against Vaxis.  Except as set forth in Section 4.15 of the Disclosure
Schedule,  Vaxis are operating in compliance  with all  Occupational  Health and
Safety Laws,  including  but not limited to the  Workplace  Hazardous  Materials
Information  System (WHMIS).  To the knowledge of Vaxis, there are no pending or
threatened  charges  against  Vaxis under  Occupational  Health and Safety Laws.
There  have been no fatal or  critical  accidents  which  might  lead to charges
against  Vaxis under  Occupational  Health and Safety Laws.  To the knowledge of
Vaxis,  there are no  materials  present in the  assets  owned or used by Vaxis,
exposure  to which  may  result  in an  industrial  disease  as  defined  in the
Workplace  Safety and  Insurance  Act  (Ontario).  If such  materials  including
asbestos, have to be removed to comply with Occupational Health and Safety laws,
Vaxis shall  indemnify and save  harmless  Cellegy for any and all costs arising
from such removal.  Vaxis have complied in all respects with any Remedial Orders
issued under  Occupational  Health and Safety Laws.  To the  knowledge of Vaxis,
there are no appeals of any Remedial Orders under Occupational Health and Safety
Laws against Vaxis which are currently outstanding.

                                      -26-
<PAGE>

     4.16  Ownership of Shares of Cellegy  Common Stock.  As of the date hereof,
neither Vaxis nor, to its  knowledge,  any of its  affiliates or associates  (as
such terms are defined under the Securities  Act  (Ontario)),  (a)  beneficially
owns, directly or indirectly,  or (b) is party to any agreement,  arrangement or
understanding for the purpose of acquiring,  holding, voting or disposing of, in
each  case,  shares  of  Cellegy  Common  Stock,  except  for  the  "standstill"
provisions of the  Memorandum of Terms dated October 18, 2001,  between  Cellegy
and Vaxis (the "No-Shop Agreement") relating to the transactions contemplated by
this Agreement.

     4.17  Insurance.  As of the date  hereof,  Vaxis  is  insured  by  insurers
reasonably  believed  by  Vaxis  to be of  recognized  financial  responsibility
against  such  losses  and risks and in such  amounts  as are  customary  in the
businesses  in which they are engaged.  All material  policies of insurance  and
fidelity or surety bonds insuring Vaxis or its  businesses,  assets,  employees,
officers  and  directors  are in full force and  effect.  There are no Claims by
Vaxis under any such policy or instrument  as to which any insurance  company is
denying liability or defending under a reservation of rights clause.

     4.18 Products and FDA Matters.

         (a) Vaxis has not received any written notices,  citations or decisions
by any  Governmental  Authority  that  any  material  product  developed,  under
development,  produced,  manufactured,  marketed or  distributed  at any time by
Vaxis  (the  "Vaxis  Products")  is  defective  or fails to meet any  applicable
standards promulgated by any such Governmental Authority.  Vaxis has complied in
all material  respects  with the laws,  regulations,  policies,  procedures  and
specifications with respect to the development,  design, manufacture,  labeling,
testing,  record  keeping and inspection of the Vaxis Products and the operation
of manufacturing facilities promulgated by the Food and Drug Administration (the
"FDA") and Health  Canada.  Since  January 1, 1998,  there have been no recalls,
field  notifications  or  seizures  ordered  or,  to  the  knowledge  of  Vaxis,
threatened by any such  Governmental  Authority with respect to any of the Vaxis
Products.  Since  January 1, 1998,  Vaxis has not  received a warning  letter or
Section 305 notice from the FDA or corresponding document from Health Canada.

         (b) Vaxis has  obtained,  in all  countries  where  either Vaxis or any
corporate partner thereof is conducting research or trials regarding, developing
or  marketing  any  Vaxis  Products,  all  applicable  licenses,  registrations,
approvals, clearances and authorizations required by local, state, provincial or
federal  agencies  (including  the  FDA and  Health  Canada)  in such  countries
regulating the safety,  effectiveness and market clearance of the Vaxis Products
currently  being  researched,  developed  or marketed by Vaxis or any  corporate
partner thereof in such  countries.  Vaxis has made available for examination by
Cellegy  all  material  information  relating  to the  regulation  of the  Vaxis
Products.

         (c) To the knowledge of Vaxis, there have been no adverse events in any
clinical  trials  conducted by or on behalf of Vaxis of such a nature that would
be required to be reported to any  applicable  Governmental  Authority that have
not been so reported to such authority.

                                      -27-
<PAGE>

         (d) Vaxis will  promptly  provide  Cellegy  with copies of any document
that is issued,  prepared,  or otherwise becomes available from the date of this
Agreement  until the Closing  which bears on the  regulatory  status of Vaxis or
Vaxis  Products  with the FDA or  Health  Canada or other  foreign  Governmental
Authorities,  including,  but not  limited to, any  filing,  deficiency  letter,
warning  letter,  non-approval  letter/order,  withdrawal  letter/order  or  any
similar document.

     4.19 Environmental Matters.

         (a) Section 4.19 of the Disclosure  Schedule sets forth a complete list
of the Environmental Approvals.

         (b) All operations of Vaxis conducted on the Real Property and the Real
Property itself while occupied by Vaxis, or at other properties over which Vaxis
currently or in past had charge,  management  or control and to the knowledge of
Vaxis, while occupied by Vaxis' predecessors in title, have been and are now, in
compliance with all Environmental  Laws and any future  Environmental Laws that,
to the knowledge of Vaxis, are presently planned or proposed by any Governmental
Authority.  Any  Release  by Vaxis  and to the  knowledge  of  Vaxis,  by Vaxis'
predecessors in title of any Hazardous  Substance into the Environment  complied
and complies with all Environmental Laws.

         (c) All  Environmental  Approvals have been obtained,  are valid and in
full force and effect,  have been and are being  complied  with,  and there have
been and are no  proceedings  commenced  or  threatened  to  revoke or amend any
Environmental Approval..

         (d)  Vaxis  or any of its  operations  has  not  been or is not now the
subject  of any  Remedial  Order,  nor  does  Vaxis  have any  knowledge  of any
investigation  or  evaluation  commenced  or  threatened  as to whether any such
Remedial  Order is necessary nor has any threat of any such Remedial  Order been
made nor are there any  circumstances  which could result in the issuance of any
such Remedial Order.

         (e) Vaxis has not been prosecuted for or convicted of any offence under
any Environmental  Law, nor has Vaxis been found liable in any proceeding to pay
any fine, penalty,  damages, amount or judgment to any Person as a result of any
Release or threatened  Release or as a result of the breach of any Environmental
Law and to the knowledge of Vaxis,  there is no basis for any such proceeding or
action.

         (f) No part of the Real  Property  or any other of the  assets of Vaxis
has ever been used by Vaxis as a landfill  or for the  disposal  of waste and to
the knowledge of Vaxis,  no part of the Real Property or any other of the assets
of Vaxis has been used by any other  Person as a landfill or for the disposal of
waste.

         (g)  Except  in  compliance  with  applicable  Environmental  Laws,  no
asbestos or asbestos containing  materials are used, stored or otherwise present
in or on the Real Property or any other assets of Vaxis. No equipment,  waste or
other material containing  polychlorinated

                                      -28-
<PAGE>

biphenyls  (PCBs)  are  used,  stored  or  otherwise  present  in or on the Real
Property or any other assets of Vaxis.

         (h) All material  environmental data and studies (including the results
of any  environmental  audit  assessment  or  environmental  management  system)
relating to Vaxis have been delivered or made available to Cellegy.

         (i) There has been no Release by Vaxis of any Hazardous Substance which
is now present in, on or under any of the Real  Property or any other  assets of
Vaxis or any property  currently or in the past under the charge,  management or
control of Vaxis (including underlying soils and substrata,  vegetation, surface
water and  groundwater)  at levels which exceed  decommissioning  or remediation
standards  under any  applicable  Environmental  Laws or standards  published or
administered  by the  Governmental  Authority  responsible  for  establishing or
applying such standards.

         (j) Vaxis has no knowledge of any  Hazardous  Substance in, on or under
the Real Property or any other assets of Vaxis.

         (k)  There  are no  underground  storage  tanks  ("USTs")  on the  Real
Property and any storage  tanks or any USTs  formerly on the Real  Property have
been  removed and any  affected  soil,  surface  water or ground  water has been
remediated in material compliance with all Laws.

         (l) Vaxis has no knowledge of any Hazardous Substance  originating from
any neighboring or adjoining  properties  which has migrated onto, into or under
or is migrating towards any of the Real Property or any other assets of Vaxis.

         (m) Vaxis has no knowledge of any Hazardous Substance  originating from
any of the Real  Property or any other assets of Vaxis which has migrated  onto,
or is migrating towards any neighboring and/or adjoining properties.

         (n) Vaxis has no  knowledge of any  proposed  changes to  Environmental
Laws which may affect the operations of Vaxis.

     4.20 Intellectual Property Rights.

         (a) Section  4.20(a) of the Disclosure  Schedule sets forth an accurate
and complete list of all Vaxis Intellectual  Property Rights,  including without
limitation (i) patents,  applications  for patents,  registrations of trademarks
(including  service  marks)  and  applications  therefor  and  registrations  of
copyrights  and  applications  therefor that are owned by Vaxis;  (ii) unexpired
licenses relating to Vaxis  Intellectual  Property Rights that have been granted
to or by Vaxis; and (iii) other agreements, including but not limited to options
to other Intellectual Property Rights,  relating to Intellectual Property Rights
that are part of the business of Vaxis as presently conducted and as proposed to
be conducted.

                                      -29-
<PAGE>

         (b) Except as specifically identified in Section 4.20 of the Disclosure
Schedule,  Vaxis is the sole beneficial and registered owner of the Intellectual
Property listed and described in such Schedule (such Intellectual Property owned
by Vaxis being referred to herein as the "Owned  Intellectual  Property"),  with
good and marketable title thereto, free and clear of any Claims and Encumbrances
or  obligations  to make any past,  present or future  payments to or confer any
benefit on any other  Person.  Vaxis is  exclusively  entitled to possess,  use,
transfer,  license  and  exploit the Owned  Intellectual  Property,  without the
consent or  permission  of or payment to any third  party.  Except as set out in
Section  4.20 of the  Disclosure  Schedule,  no Person  other than Vaxis has any
Intellectual  Property  Rights in or to the Owned  Intellectual  Property or any
aspect or component thereof.  There has been no sale,  transfer or assignment of
the Owned  Intellectual  Property  or any  granting  of any  agreement  or right
capable of  becoming  an  agreement  or option  for the  purchase,  transfer  or
assignment of any such assets.

         (c) With respect to any Intellectual  Property used in whole or in part
in or required for the carrying on of the business of Vaxis as conducted  and as
proposed to be conducted,  or otherwise held by Vaxis, of which Vaxis is not the
sole  beneficial  and  registered  owner,  as  identified in Section 4.20 of the
Disclosure  Schedule  (such  Intellectual  Property  being referred to herein as
"Third  Party  Intellectual  Property"),  Vaxis has been  granted all  necessary
rights for the continuing use of such Third Party  Intellectual  Property in the
business of Vaxis as  conducted  and as proposed  to be  conducted,  pursuant to
valid,  written  agreements.  All such  agreements  are in good  standing and no
breach or default by Vaxis or, to the  knowledge  of Vaxis,  by any other  party
thereto, has occurred thereunder. All assignment of Intellectual Property rights
to Vaxis have been properly executed and duly recorded.

         (d) Except as otherwise specifically  identified in Section 4.20 of the
Disclosure Schedule, Vaxis has not granted any license, waiver or other right to
any other Person with respect to the Owned Intellectual Property.

         (e) All  registrations or issuances of Intellectual  Property Rights in
any  jurisdiction,  and  all  applications  in any  jurisdiction  for  any  such
issuances or registrations, by or for the benefit of Vaxis, as listed in Section
4.20 of the Disclosure  Schedule,  are unexpired,  have not been abandoned,  are
recorded  in the name of Vaxis and,  to the  knowledge  of Vaxis,  are valid and
enforceable.  No registrations  or issuances of Intellectual  Property Rights in
any jurisdiction,  or any application in any jurisdiction for any such issuances
or  registrations,  by or for the benefit of Vaxis, as listed in Section 4.20 of
the  Disclosure  Schedule,  has been  rejected  (without  such  rejection  being
subsequently  withdrawn  or overcome by  amendment),  and, to the  knowledge  of
Vaxis, no Person has challenged the validity or opposed any such registration or
issuance.

         (f) All employees,  consultants or other Persons who have been involved
in the development,  modification or use of the Intellectual  Property Rights or
who  have  had  access  to  confidential  Technical  Knowledge  relating  to the
Intellectual Property Rights, are under a legal obligation of confidentiality to
Vaxis with respect to such information, have assigned all of their rights in and
to the Intellectual Property Rights to Vaxis,  expressly waived any moral rights
in the Intellectual  Property Rights and have executed  written  agreements with
Vaxis to that effect.  No such  employee or other Person has excluded in writing
works or inventions made prior to his or her employment or engagement with Vaxis
from his or her assignment of

                                      -30-
<PAGE>

inventions  pursuant to such agreement.  To the knowledge of Vaxis after due and
reasonable inquiry,  none of the employees of Vaxis is subject to any obligation
to any other Person,  whether  contractual or otherwise,  including  obligations
relating  to  confidentiality,  non-competition  or  possession  of  proprietary
information,  or have  executed any  assignment  or license of any  Intellectual
Property  Rights  with any  Person  other  than  Vaxis,  or are  subject  to any
judgment, decree or order of any court or administrative agency, relating to the
Intellectual  Property  Rights or  otherwise,  that would  interfere  with their
duties to Vaxis or that  would  conflict  with  Vaxis's  business  as  presently
conducted  and proposed to be conducted.  To Vaxis'  knowledge,  no  independent
contractors  who have  performed  services  related to Vaxis'  business have any
right,  title or interest in Vaxis'  Intellectual  Property  Rights.  "Technical
Knowledge" means know-how, processes, methods, techniques, formulae, algorithms,
inventions,  plans,  architectures,  designs,  layouts,  structures,  sequences,
organizations,  flow charts, configurations,  models, concepts,  specifications,
technical  data,   descriptions,   instructions,   records,   notes,  and  other
information of a technological or scientific nature, regardless of form.

         (g) To the  knowledge of Vaxis,  there are no Canadian or United States
governmental  prohibitions or restrictions on the use, transfer or export of the
Intellectual  Property  Rights.  Notwithstanding  the  foregoing,  there  may be
prohibitions  or  restrictions  on the use,  transfer or export of the  products
contemplated  by the  business  of  Vaxis as  conducted  and as  proposed  to be
conducted,  such as for  example,  United  States  Food and Drug  Administration
approval or Canadian Health  Protection branch approval or approval of any other
governmental   or  regulatory   organization,   association  or  agency  of  any
jurisdiction in which such products may be used or to which such products may be
transferred or exported.

         (h) There is no  pending  or,  to the  knowledge  of Vaxis,  threatened
action,  suit,  proceeding,   claim  or  investigation  relating  to  the  Owned
Intellectual  Property or to the Third Party Intellectual  Property,  whether or
not involving  Vaxis,  contesting the rights of Vaxis or any third party thereto
or that would  prevent,  limit or impair  Vaxis's  ability to utilize  the Owned
Intellectual  Property or the Third Party Intellectual  Property in the business
of Vaxis as presently conducted and proposed to be conducted.

         (i) The carrying on of the business of Vaxis as presently conducted and
as proposed to be conducted, including (i) the manufacture,  marketing, license,
sale or use of any product currently or proposed to be developed,  manufactured,
marketed,  licensed,  sold or used by  Vaxis,  (ii)  any  service  currently  or
proposed to be marketed or provided by Vaxis, or (iii) the use of any trademarks
identified in Section 4.20 of the  Disclosure  Schedule by Vaxis,  has not, does
not and will not violate or infringe any  Intellectual  Property Rights or other
rights of any other Person,  including rights relating to defamation,  rights of
privacy or publicity  and  contractual  rights,  nor requires the payment of any
royalty,  fees or other payment or the conferral of any other benefit on another
Person.  Vaxis and its employees  have not received any  communication  alleging
that Vaxis,  or their  employees,  agents or  contractors,  have violated or may
violate any Intellectual Property Rights of any other Person.

         (j) To the knowledge of Vaxis,  no Person has infringed or violated the
Intellectual Property Rights of Vaxis.

                                      -31-
<PAGE>

         (k)  Vaxis  has  taken  commercially  reasonable  steps  sufficient  to
safeguard and maintain the secrecy and confidentiality of and Vaxis' proprietary
rights in the unpatented know-how, technology,  proprietary processes, formulae,
and other information that is in the aggregate material to the conduct of Vaxis'
business.

         (l) Except as  disclosed in Section  4.20 of the  Disclosure  Schedule,
there are no royalties,  honoraria,  fees or other payments  payable by Vaxis to
any person by reason of the ownership,  use, license, sale or disposition of any
of Vaxis' Intellectual Property Rights.

         (m) The execution, delivery and performance of this Agreement by Vaxis,
and the consummation by Vaxis of the transactions  contemplated hereby, will not
breach,  violate or conflict with any agreement  governing  Vaxis'  Intellectual
Property Rights,  will not cause the forfeiture or termination or give rise to a
right of forfeiture or termination of Vaxis'  Intellectual  Property Right or in
any way impair the right of Vaxis to use, sell,  license or dispose of, or bring
any action for the  infringement  of,  Vaxis'  Intellectual  Property  Rights or
portion thereof.

         (n)  For  purposes  of  this  Section  4.20,  "use,"  with  respect  to
Intellectual Property Rights,  includes make, have made, offer for sale, import,
reproduce, display or perform (publicly or otherwise),  prepare derivative works
based on, sell,  distribute,  disclose and otherwise  exploit such  Intellectual
Property  Rights and  products  incorporating  or  subject to such  Intellectual
Property Rights.

     4.21 Real Property.

         (a) Section  4.21(a) of the  Disclosure  Schedule lists all of the real
property owned or currently used by Vaxis in the course of Vaxis'  business (the
"Real Property"). Section 4.21(a) of the Disclosure Schedule also lists all real
property  owned or used by Vaxis in the  course of Vaxis'  business  at any time
since January 1, 1998, other than the Real Property.

         (b) All Real Property is in all material respects suitable and adequate
for the uses for which it is currently  devoted.  Vaxis has good and  marketable
title in fee simple  absolute to Real Property  indicated on Section  4.21(a) of
the Disclosure Schedule to be owned by it, and to the buildings,  structures and
improvements thereon, and a valid leasehold interest in all other Real Property,
in each case free and clear of all Encumbrances.

         (c) All buildings,  structures, fixtures and other improvements on Real
Property are in good repair,  and free of defects  (latent or patent),  ordinary
wear  and tear  excepted,  and fit for the  uses to  which  they  are  currently
devoted.  To Vaxis'  knowledge,  all such  buildings,  structures,  fixtures and
improvements on the Real Property conform to all applicable laws.

         (d) To Vaxis'  knowledge,  none of the Real  Property is subject to any
Other  Agreement  or other  restriction  of any nature  whatsoever  (recorded or
unrecorded)  preventing  or limiting  Vaxis'  right to use it in the manner such
property is  currently  being used.  "Other  Agreement"  means any  agreement or
arrangement  between two or more  persons (or  entities)  with  respect to their
relative rights and/or obligations or with respect to a thing done or to be done

                                      -32-
<PAGE>

(whether or not conditional,  executory, express, implied, in writing or meeting
the requirements of contract), including, without limitation, contracts, leases,
promissory  notes,   covenants,   easements,   rights  of  way,  commitments  or
understanding.

         (e) To  Vaxis'  knowledge,  no  portion  of the  Real  Property  or any
building,  structure,  fixture  or  improvement  thereon is the  subject  of, or
affected by, any expropriation or condemnation or similar  proceeding  currently
instituted or pending or threatened,  and Vaxis has no knowledge that any of the
foregoing are, or will be, the subject of, or affected by, any such proceeding.

         (f) The Real  Property has direct and  unobstructed  access to adequate
electric,  gas, water,  sewer and telephone  lines,  and public streets,  all of
which are adequate for the uses to which the Real Property is currently devoted.

     4.22  Residence  of Vaxis.  Vaxis is not a  non-resident  of Canada for the
purposes of the Income Tax Act (Canada).

     4.23  Taxable   Transaction.   Vaxis  acknowledges  that  the  transactions
contemplated  by this  Agreement,  including the Transaction and the issuance of
the  Initial   Consideration  and  Earn-Out   Consideration,   will  be  taxable
transactions under United States and Canadian tax laws.

     4.24 Complete  Copies of Requested  Documents.  Vaxis has delivered or made
available  (through public sources or directly) true and complete copies of each
document that has been  requested by Cellegy or its counsel in  connection  with
their legal and accounting review of Vaxis.

     4.25  Disclosure.  No  representation  or  warranty  made by  Vaxis in this
Agreement,  nor  any  document,   written  information,   statement,   financial
statement,  certificate or exhibit  prepared and furnished or to be prepared and
furnished by Vaxis or its representatives  pursuant hereto or in connection with
the transactions contemplated hereby, when taken together,  contained any untrue
statement  of a  material  fact when made,  or omitted to state a material  fact
necessary  to make the  statements  or facts  contained  herein or  therein  not
misleading in light of the circumstances under which there were furnished.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CELLEGY

     Cellegy represents and warrants to Vaxis and each Stockholder as follows:

     5.1 Organization. Cellegy is a corporation duly organized, validly existing
and in good  standing  under  the laws of the  State of  California  and has the
corporate power to carry on its business as it is now being  conducted.  Cellegy
is duly  qualified  as a  foreign  corporation  to do  business,  and is in good
standing  (to  the  extent  the  concept  of  good  standing  exists),  in  each
jurisdiction  where the character of its properties owned or held under lease or
the nature of its

                                      -33-
<PAGE>

activities  makes such  qualification  necessary,  except where failure to be so
qualified would not have a Material Advance Effect on Cellegy.

     5.2 Authority  Relative to this Agreement.  Cellegy has the corporate power
to enter into this  Agreement and to carry out its  obligations  hereunder.  The
execution and delivery of this Agreement and the  consummation by Cellegy of the
transactions  contemplated  hereby and thereby have been duly  authorized by the
Boards of Directors of Cellegy,  and no other corporate  proceedings on the part
of  Cellegy  are  necessary  to  approve  this  Agreement  or  the  transactions
contemplated  hereby.  This  Agreement  has been duly and validly  executed  and
delivered by Cellegy and  constitutes  a valid and binding  agreement of Cellegy
and is  enforceable  against  Cellegy in accordance  with its terms,  subject to
applicable bankruptcy,  insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.

     5.3  Consents  and  Approvals;   No   Violations.   Except  for  applicable
requirements of the Securities Act, the Exchange Act,  Securities Act (Ontario),
the Investment  Canada Act or blue sky laws, and if required  filing a notice of
listing of  additional  shares with the NASDAQ,  no filing with,  and no permit,
authorization,  consent  or  approval  of, any  public or  governmental  body or
authority  is  necessary  for the  consummation  by Cellegy of the  transactions
contemplated  by this Agreement,  including,  without  limitation,  the issue of
shares of Cellegy  Common  Stock.  Neither the  execution  and  delivery of this
Agreement  by  Cellegy,  nor the  consummation  by Cellegy  of the  transactions
contemplated  hereby,  nor  compliance  by  Cellegy  with any of the  provisions
hereof, will (a) result in any breach of the Articles of Incorporation or Bylaws
of  Cellegy,  (b) result in a  violation  or breach of, or  constitute  (with or
without  due  notice  or lapse of time or both) a  default  (or give rise to any
right of termination, cancellation,  acceleration or change in the award, grant,
vesting or determination)  under, or give rise to creation of any lien,  charge,
security  interest or  Encumbrance  upon,  any of the  respective  properties or
assets of Cellegy or any of its subsidiaries  under, any agreement or instrument
to which Cellegy is a party or by which any of their properties or assets may be
bound or (c) violate  any order,  writ,  injunction,  decree,  statute,  rule or
regulation applicable to Cellegy or any of its properties or assets, except such
as would not in the aggregate have a Material Adverse Effect on Cellegy.

     5.4  Cellegy  Common  Stock.  The shares of Cellegy  Common  Stock that are
issuable  pursuant to this Agreement will be delivered to the Stockholders  free
and clear of all  Encumbrances  other than as set forth herein or from any liens
or Encumbrances  created by or through,  or otherwise resulting from, actions or
inactions  by the  Stockholders  or  under  applicable  Law.  Upon  issuance  in
accordance  with this  Agreement,  the shares of Cellegy  Common  Stock that are
issuable  pursuant  to this  Agreement  will be validly  issued,  fully paid and
non-assessable.

     5.5 SEC Filings.  Cellegy has filed all forms,  reports and documents  that
are required to be filed by Cellegy with the Securities and Exchange  Commission
(the "SEC") since  December  31,  2000.  All such  required  forms,  reports and
documents  (including  such forms,  reports and documents  that Cellegy may file
subsequent  to the date  hereof)  are  referred  to herein as the  "Cellegy  SEC
Reports." As of their respective  dates, to Cellegy's  knowledge the Cellegy SEC
Reports (i) complied as to form in all material  respects with the  requirements
of the Securities Act or the Securities Exchange Act of 1934, as applicable, and
the rules and  regulations of the SEC thereunder  applicable to such Cellegy SEC
Reports, and (ii) did not at the

                                      -34-
<PAGE>

time they were filed (or if amended or superseded by a filing,  then on the date
of such filing) contain any untrue statement of a material fact or omit to state
a material fact required to be stated  therein or necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not  misleading,  except to the extent  corrected by a subsequently  filed
Cellegy SEC Report that was filed before the date of this Agreement.

     5.6  Absence of Certain  Changes.  Except as set forth in the  Cellegy  SEC
Reports,  since  September  30,  2001,  Cellegy has operated its business in the
ordinary course consistent with past practice, and since such date there has not
occurred with respect to Cellegy: (a) any change, event or condition (whether or
not covered by  insurance)  that has  resulted in a Material  Adverse  Effect on
Cellegy;  (b) any material change in accounting methods or practices  (including
any change in depreciation or amortization  policies or rates) by Cellegy or any
material  revaluation  by  Cellegy  of any of its  material  assets;  or (c) any
declaration,  setting  aside or payment  of a dividend  on, or the making of any
other  distribution  in respect of, the capital stock of Cellegy,  or any split,
combination or recapitalization of the capital stock of Cellegy or any direct or
indirect  redemption,  purchase or other  acquisition  of any  capital  stock of
Cellegy or any change in any rights, preferences,  privileges or restrictions of
any outstanding security of Cellegy.

     5.7  Securities  Law Compliance  Regarding  Issuance of Shares;  Listing of
Shares on Nasdaq.  Assuming the accuracy of the representations,  warranties and
covenants  made by the  Stockholders  in this  Agreement,  the shares of Cellegy
Common Stock to be issued to the Stockholders  pursuant to this Agreement,  when
issued  in  accordance  with  the  provisions  of this  Agreement,  will be duly
authorized,  validly issued,  fully paid and nonassessable and will be issued in
compliance with all applicable  material U.S. federal and state securities laws.
Before  the time  that the  Stockholders  may  first  sell  any such  shares  in
compliance  with U.S.  and  Canadian  securities  laws,  Cellegy  will take such
actions  (including,  if  required,  filing a  Notification  Form for Listing of
Additional  Shares) as are necessary to cause the shares of Cellegy Common Stock
to be issued to the  Stockholders  pursuant to this Agreement to be approved for
trading on the Nasdaq National Market.

     5.8 Rule 144 and Public Sales of Purchased  Shares.  Subject to  compliance
with the  provisions  of Rule 144  and/or  Rule 905 of  Regulation  S under  the
Securities  Act,  commencing  one  year  after  the  Closing  Date  each  of the
Stockholders  will be eligible to publicly  sell their shares of Cellegy  Common
Stock without  restriction in ordinary  "brokers'  transactions"  (as defined in
Rule 144) by complying with the provisions of Rule 144. Rule 144 governs,  among
other things, the sale of "restricted  securities." Rule 144 defines "restricted
securities" as including,  among other things, securities "acquired ... from the
issuer...in  a  transaction  or chain of  transactions  not involving any public
offering"  as well as "equity  securities  of  domestic  issuers  acquired  in a
transaction...subject to the conditions  of...Regulation S". Under Rule 144, the
amount of "restricted  securities" sold for the account of any person who is not
an  affiliate  of the  issuer,  together  with all  other  sales  of  restricted
securities of the same class for the account of such person within the preceding
three months, shall not exceed the greater of (i) one percent of the outstanding
shares of Common  Stock as shown by the most recent  report (such as a quarterly
report on Form 10-Q or annual report on Form 10-K)  published by the issuer,  or
(ii) the average weekly  reported  volume of trading in such  securities (in the
case of the Company, as reported on

                                      -35-
<PAGE>

the Nasdaq National  Market) during the four calendar weeks preceding the filing
of a Form 144 (if a Form 144 is required to be filed).  Moreover,  if the amount
of securities to be sold in reliance on Rule 144 during any  three-month  period
exceeds 500 shares or has an  aggregate  sale price in excess of $10,000,  three
copies of a notice on Form 144 must be filed with the SEC, and if the securities
are admitted to trading on any  national  securities  exchange,  one copy of the
Form  144  must  also  be  transmitted  to the  principal  exchange  where  such
securities  are so  admitted  (which in the case of the  Company  is the  Nasdaq
National Market). In addition, securities sold pursuant to Rule 144 must be sold
in "brokers' transactions" or in transactions directly with a "market maker", as
that term is defined in Section  3(a)(38) of the  Exchange  Act,  and the person
selling the securities  must not (i) solicit or arrange for the  solicitation of
orders to buy the  securities  in  anticipation  of or in  connection  with such
transactions,  or (2) make any payment in  connection  with the offer or sale of
the  securities  to any person  other than the broker who  executed the order to
sell the securities. For this purpose, the term "brokers' transactions" includes
transactions by a broker in which the broker

          (1)  does no more  than  execute  the  order  or  orders  to sell  the
     securities  as agent for the person for whose  account the  securities  are
     sold;  and  receives  no  more  than  the  usual  and  customary   broker's
     commission;

          (2) neither  solicits nor arranges for the  solicitation of customers'
     orders to buy the securities in  anticipation  of or in connection with the
     transaction;  provided, that the foregoing shall not preclude (i) inquiries
     by the broker of other brokers or dealers who have indicated an interest in
     the securities  within the preceding 60 days,  (ii) inquiries by the broker
     of his customers who have  indicated an  unsolicited  bona fide interest in
     the  securities  within  the  preceding  10  business  days;  or (iii)  the
     publication  by the broker of bid and ask quotations for the security in an
     inter-dealer quotation system provided that such quotations are incident to
     the maintenance of a bona fide inter-dealer market for the security for the
     broker's  own account and that the broker has  published  bona fide bid and
     ask quotations for the security in an inter-dealer quotation system on each
     of at least twelve days within the preceding  thirty  calendar days with no
     more than four business days in  succession  with such two-way  quotations;
     and

          (3) after reasonable inquiry is not aware of circumstances  indicating
     that the person for whose account the securities are sold is an underwriter
     with  respect  to the  securities  or that the  transaction  is a part of a
     distribution of securities of the issuer.  Without  limiting the foregoing,
     the broker shall be deemed to be aware of any facts or statements contained
     in the Form 144.

The volume limitations,  manner of sale and Form 144 requirements of Rule 144 do
not apply to restricted  securities  sold for the account of a person who is not
an affiliate of the issuer at the time of the sale and has not been an affiliate
during the preceding three months,  provided that a period of at least two years
has elapsed  since the later of the date the  securities  were acquired from the
issuer or from an affiliate of the issuer.

                                      -36-
<PAGE>

ARTICLE VI
CONDUCT OF BUSINESS

     6.1 Conduct of Business by Vaxis Pending the Transaction. During the period
from the date of this Agreement and continuing until the Closing,  except as set
forth in or contemplated by this Agreement,  as agreed to in writing by Cellegy,
or as set forth in Section 6.1 of the Disclosure Schedule, Vaxis:

         (i) shall conduct its operations in the ordinary course consistent with
the manner as heretofore conducted;

         (ii) shall use commercially  reasonable efforts, to preserve intact its
business organizations and goodwill, keep available the services of its officers
and employees and maintain satisfactory  relationships with those persons having
business relationships with it;

         (iii)  shall not  amend  its  Articles  of  Incorporation  or Bylaws or
comparable governing instruments;

         (iv)  shall  not  (A)  acquire  or  agree  to  acquire  by  merging  or
consolidating  with,  or by  acquiring  any equity  interest in or  purchasing a
substantial  portion of the assets of, or by any other  manner,  any business or
any  corporation,  partnership,  joint  venture,  association  or other business
organization  or division  thereof,  or (B)  acquire or agree to acquire  assets
other than in the ordinary  course of business or (C) release or  relinquish  or
agree to release or relinquish any material contract rights;

         (v)  shall  not  effect  any  stock  split  or  otherwise   change  its
capitalization   or  issue  any  shares  of  its  capital  stock  or  securities
convertible into or exchangeable or exercisable for shares of its capital stock,
except upon  exercise of options  outstanding  as of the date hereof to purchase
Vaxis Common Shares under the Vaxis Stock Options;

         (vi) shall not grant, confer or award any options, warrants, conversion
rights or other rights,  not existing on the date hereof,  to acquire any shares
or other  securities  of Vaxis or amend  or  otherwise  modify  any  outstanding
options or warrants;

         (vii)  shall  not  set  aside,  make  or  pay  any  dividend  or  other
distribution,  payable in cash, shares,  property or otherwise,  with respect to
any of its capital,  or to redeem,  purchase or otherwise  acquire,  directly or
indirectly,  any of its capital,  except for the payment to certain employees of
Vaxis cash in lieu of stock options to a maximum of $22,000 in Canadian funds;

         (viii) shall not, except in the ordinary course of business  consistent
with past practice,  (x) incur,  create,  assume or otherwise  become liable for
borrowed money or assume, guarantee,  endorse or otherwise become responsible or
liable for the obligations of any other individual,  corporation or other entity
or (y) make any loans or advances to any other Person;

         (ix) shall not (x) make,  revoke or change any material  election  with
respect to Taxes unless  required by applicable  law or (y) settle or compromise
any material Tax liability;

                                      -37-
<PAGE>

         (x)  shall  not  authorize  capital  expenditures  which  are,  in  the
aggregate, in excess of $50,000;

         (xi) shall not, except for the payment of reasonable  professional fees
relating to the  Transaction  or  otherwise  and  reasonable  fees to  financial
advisors  (which  financial  advisory fees have heretofore been disclosed or are
otherwise  acceptable,  to  Cellegy),  pay,  discharge  or satisfy  any  Claims,
liabilities  or  obligations   (absolute,   accrued,   asserted  or  unasserted,
contingent  or  otherwise)  in an amount in excess of $50,000 in the  aggregate,
other than the payments, discharges or satisfactions,  in the ordinary course of
business and consistent with past practice, of liabilities reflected or reserved
against in Balance  Sheet (as  defined in Section  4.5  hereto) or  subsequently
incurred in the ordinary course of business and consistent with past practice or
collect,  or accelerate the collection of, any amounts owed (including  accounts
receivable) other than collection in the ordinary course;

         (xii)  shall  not,  except in the  ordinary  course of  business  or as
otherwise expressly  contemplated hereby, grant or acquire any material licenses
to use any  Intellectual  Property Rights or unpatented  inventions set forth in
the  Disclosure  Schedule;  provided that the Vaxis shall not grant any material
licenses  to  use  any  material  Intellectual  Property  Rights  or  unpatented
inventions  so set forth  without the prior  written  consent of Cellegy,  which
consent shall not be unreasonably withheld;

         (xiii) shall not allow any insurance  policy naming it as a beneficiary
or a loss payee to be cancelled, terminated or materially altered, except in the
ordinary  course of business and  consistent  with past  practice and  following
written notice to Cellegy  (provided that an insurer  refusing to renew a policy
shall not be deemed a breach of this covenant);

         (xiv) shall not enter into any  hedging,  option,  derivative  or other
similar transaction;

         (xv) shall notify  Cellegy a  reasonable  time in advance of, and shall
permit  a   representative   of  Cellegy  to  review  or  participate   in,  any
communications,  meetings,  or correspondence  between Vaxis and the FDA, Health
Canada,  the European  Agency for the Evaluation of Medical  Products or similar
Canadian or other regulatory  agency and in any of the Vaxis' internal  planning
meetings  that cover  substantive  issues  relating  to  products  or  strategic
partners,  except,  in each case, as may be inconsistent  with applicable law or
regulation; and

         (xvi)  shall not agree,  in writing  or  otherwise,  to take any of the
foregoing actions.

     6.2 Invention Assignment and Confidentiality Agreements. Vaxis will use its
best efforts to obtain from each  employee,  contractor  and consultant of Vaxis
who  has  had  access  to  any  Vaxis  Intellectual  Property  or to  any  other
confidential or proprietary  information of Vaxis, or its clients,  an invention
assignment  and  confidentiality  agreement in a form  reasonably  acceptable to
Cellegy, duly executed by such employee,  contractor or consultant and delivered
to Vaxis and/or Cellegy.

                                      -38-
<PAGE>

     6.3 Compensation  Plans.  During the period from the date of this Agreement
and  continuing  until the Closing  Vaxis  agrees that it will not,  without the
prior  written  consent of Cellegy:  (a) enter  into,  adopt or amend any bonus,
profit sharing, compensation,  stock option, Pension Plan, retirement,  deferred
compensation,  employment,  severance or other Benefit Plan,  agreement,  trust,
plan, fund or other  arrangement  between Vaxis and one or more of its officers,
directors  or  Employees,  in each case so as to  materially  increase  benefits
thereunder  (collectively,  "Compensation Plans"); (b) grant or become obligated
to grant any  increase in the  compensation  or fringe  benefits  of  directors,
officers or Employees  (including any such increase pursuant to any Compensation
Plan) or any increase in the  compensation  payable or to become  payable to any
officer, except, with respect to Employees other than officers, for increases in
compensation in the ordinary  course of business  consistent with past practice,
or  enter  into  any  contract,  commitment  or  arrangement  to do  any  of the
foregoing;   (c)  institute  any  new  employee  benefit,   welfare  program  or
Compensation  Plan;  (d)  make  any  change  in any  Compensation  Plan or other
employee welfare or benefit  arrangement or enter into any employment or similar
agreement  or  arrangement  with any  employee;  or (e) enter  into or renew any
contract, agreement,  commitment or arrangement providing for the payment to any
director,  officer or Employee of  compensation or benefits  contingent,  or the
terms of which are  materially  altered  in favor of such  individual,  upon the
occurrence of any of the transactions contemplated by this Agreement.

     6.4 Current  Information.  From the date of this  Agreement to the Closing,
Vaxis will cause one or more of its  designated  representatives  to confer on a
regular  and  frequent  basis (not less than  weekly)  with  representatives  of
Cellegy  and to report  the  general  status of its  ongoing  operations  and to
deliver to the other (not less than quarterly)  unaudited  consolidated  balance
sheets and related  consolidated  statements of income,  changes in stockholders
equity and  changes in  financial  position  for the period  since the last such
report.  Vaxis  will  promptly  notify the other of any  material  change in the
normal course of its business or in its properties.

     6.5 Legal  Conditions to Transaction.  Each of Vaxis and Cellegy shall, and
shall cause its  subsidiaries  to, use all  reasonable  efforts (a) to take,  or
cause to be taken,  all  actions  necessary  to comply  promptly  with all legal
requirements which may be imposed on such party or its subsidiaries with respect
to the Transaction and the consummation of the transactions contemplated by this
Agreement,  and (b) to obtain (and to cooperate  with the other party to obtain)
any  consent,  authorization,  order or approval  of, or any  exemption  by, any
Governmental  Authority  or any other  public or private  third  party  which is
required  to be  obtained  or made by such party or any of its  subsidiaries  in
connection  with  the  Transaction  and the  transactions  contemplated  by this
Agreement.  Each of Vaxis and Cellegy will promptly  cooperate  with and furnish
information  to the other in  connection  with any such burden  suffered  by, or
requirement imposed upon, any of them or any of their subsidiaries in connection
with the foregoing.

                                      -39-
<PAGE>

ARTICLE VII
ADDITIONAL AGREEMENTS

     7.1 Access and Information.

         (a) Vaxis  shall  afford  Cellegy  and its  financial  advisors,  legal
counsel,  accountants,  consultants and other representatives  reasonable access
during normal  business hours  throughout the period from the date hereof to the
Closing  to  all  of  its  books,  records,  properties,  facilities,  personnel
commitments  and records  (including but not limited to Tax Returns) and, during
such period, shall furnish promptly to Cellegy all information concerning Vaxis'
business, properties and personnel, as Cellegy may reasonably request.

         (b) All  information  furnished  by Vaxis to  Cellegy or  furnished  by
Cellegy  to  Vaxis  pursuant  to this  Agreement  shall be  treated  as the sole
property of the party  furnishing  the  information  until  consummation  of the
Transaction  contemplated  hereby.  The parties  will hold any such  information
which is nonpublic in  confidence  to the extent  required by, and in accordance
with the  Confidentiality  Agreement  between  Vaxis and Cellegy dated March 22,
2000 ("Confidentiality Agreement") and the Memorandum of Terms dated October 18,
2001  between  Cellegy  and  Vaxis,   and  such  agreements  shall  survive  the
termination of this Agreement.

     7.2  Acquisition  Proposals.  From the date  hereof  until the  earlier  of
termination of this Agreement or the Closing,  without the prior written consent
of Cellegy Vaxis will not, and shall use best efforts to cause Vaxis' directors,
officers,   employees,  agents,  stockholders,   advisors,  legal  counsel,  and
affiliates  ("Representatives")  not to,  directly or  indirectly,  (a) solicit,
initiate or encourage  submission of proposals or offers from any party relating
to (i) any acquisition or purchase of substantial  assets or any equity interest
in Vaxis, any acquisition,  consolidation,  business combination,  tender offer,
exchange offer,  dissolution or similar transaction with Vaxis or (ii) any other
transaction  incompatible  with the  transactions  described  in this  Agreement
(including,  without limitation,  a joint venture or other similar transaction),
or (b) participate in any discussions or negotiations  regarding,  or furnish to
any other  person any  confidential  information  with  respect to, or otherwise
cooperate in any way with, or  participate  in,  facilitate  or  encourage,  any
effort or attempt by any  person  related to Vaxis or any other  person to do or
seek  any of the  foregoing,  and  promptly  will  terminate  any  such  pending
discussions and will notify Cellegy promptly if it shall receive any indications
of  interest  or offer or request  for  information  with  respect to any of the
foregoing.

     7.3 Nasdaq  National  Market.  Cellegy  shall take all actions  that may be
required in order to permit the shares of Cellegy  Common Stock  issuable to the
Stockholders to be approved for trading on the NASDAQ National Market.

     7.4 Ongoing Operations.  Cellegy agrees to use all commercially  reasonable
efforts to  maintain  the  business  of Vaxis at its  current  location,  and to
continue to operate the  business  of Vaxis in a manner  consistent  in material
respects with the  historical  business of Vaxis,  subject to Cellegy's  overall
right to make  decisions with respect to the business of Vaxis  consistent  with
Cellegy's good faith business judgment, for a period of at least 18 months after
the Closing Date.

                                      -40-
<PAGE>

     7.5 Certain Employee Benefit Plans Matters.

         (a) Cellegy confirms to Vaxis that it is Cellegy's present intention to
provide,  after the Closing,  to continuing  Employees employee benefit programs
that are not less  favourable  to such  Employees  than those being  provided by
Vaxis  immediately  before the  Closing.  Cellegy  shall have no  obligation  to
continue employment of any Employee.

         (b)  Immediately  before the Closing,  Vaxis shall pay any amounts that
may be owed  under  the terms of any  employment,  consulting,  termination  and
severance agreements to which Vaxis is a party.

     7.6 Stock Options,  Warrants;  Employee Benefit Plans.  Before the Closing,
Vaxis  shall  terminate  all  Benefit  Plans and shall take such  actions as are
necessary to cause all outstanding options,  warrants or other rights to acquire
securities of Vaxis to terminate on or before the Closing.

     7.7 Public  Announcements.  The  initial  press  release  relating  to this
Agreement shall be a joint press release.  Thereafter, so long as this Agreement
is in effect,  Vaxis agrees that it will obtain the  approval of Cellegy  (which
shall not be  unreasonably  withheld)  before  issuing any press  release or any
other written  communication  (including any written communication to employees)
relating to the transactions contemplated by this Agreement.

     7.8  Expenses.  All costs and  expenses  incurred in  connection  with this
Agreement  and  the  transactions   contemplated  hereby  (whether  or  not  the
Transaction  is completed)  shall be paid by the party  incurring such expenses,
including  each  party's  respective  legal  and  auditors'  fees  ("Transaction
Expenses").  Notwithstanding the foregoing,  Vaxis shall pay for reasonable fees
and expenses of a single counsel to the Stockholders,  Blake,  Cassels & Graydon
LLP, in the preparation and review of any transaction  documents by its advisors
on behalf of the Stockholders  but any Stockholder  shall pay for any additional
fees and expenses of any additional advisor hired by that Stockholder.

     7.9 Additional Agreements.

         (a) Subject to the terms and conditions  herein  provided,  each of the
parties  hereto  agrees to use all  reasonable  efforts to take,  or cause to be
taken, all action and to do, or cause to be done, all things  necessary,  proper
or advisable  under  applicable  laws and  regulations  to  consummate  and make
effective the transactions  contemplated by this Agreement.  In case at any time
after the Closing any further  action is necessary or desirable to carry out the
purposes of this Agreement,  the proper officers and/or directors of Cellegy and
Vaxis shall take all such necessary action.

         (b) Cellegy and Vaxis each will  cooperate with one another and use all
reasonable efforts to prepare all necessary documentation to effect promptly all
necessary  filings and to obtain all  necessary  permits,  consents,  approvals,
orders and authorizations of or any

                                      -41-
<PAGE>

exemptions  by, all third  parties and  Governmental  Authorities  necessary  to
consummate the transactions contemplated by this Agreement.

     7.10 Holding Period for Cellegy Common Stock.  Each Stockholder  agrees and
covenants  with  Cellegy  and Vaxis  that the  Stockholder  shall not (1) offer,
pledge,  sell,  contract  to sell,  sell any  option or  contract  to  purchase,
purchase any option or contract to sell,  grant any option,  right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares  of  Cellegy  Common  Stock  that may be  issued  as part of the  Initial
Consideration or (2) enter into any swap or other  arrangement that transfers to
another,  in whole or in part, any of the economic  consequences of ownership of
any such  shares of Cellegy  Common  Stock,  for a period of (i)  eighteen  (18)
months in the case of the  Founders,  and (ii) twelve (12) months in the case of
all other  Stockholders  (such  12-month  period  referred  to as the  "Investor
Lock-Up  Period"),  after the Closing.  However,  if the trading  volume for the
Cellegy  Common Stock on the Nasdaq Stock Market is greater than 150,000  shares
per day for a period of thirty (30)  consecutive  trading days after the Closing
Date and before  expiration of the Investor  Lock-Up  Period,  then the Investor
Lock-Up  Period  under  clause (ii) of the  preceding  sentence  shall no longer
apply.

     7.11 Rule 144  Reporting.  With a view to making  available the benefits of
certain rules and  regulations  of the SEC which may at any time permit the sale
of the Cellegy Common Stock to the public without  registration,  Cellegy agrees
to:

         (a) use its best efforts to make and keep public information available,
as those terms are understood and defined in Rule 144 under the Securities Act;

         (b)  File  with  the SEC in a  timely  manner  all  reports  and  other
documents required of Cellegy under the Securities Act and the Exchange Act; and

         (c) So long as any Stockholder  owns any shares of Cellegy Common Stock
acquired  pursuant to this Agreement,  to furnish to the  Stockholder  forthwith
upon  request a written  statement  by  Cellegy  as to its  compliance  with the
reporting requirements of Rule 144 and a copy of such publicly available reports
and documents of Cellegy as a  Stockholder  may  reasonably  request in availing
itself of any rule or regulation  of the SEC allowing a Stockholder  to sell any
such Cellegy Common Stock without registration.

         (d) Cellegy  shall have no  obligations  pursuant to this  Section 7.11
after two years from the Closing Date,  provided that a Stockholder  is eligible
to sell such shares of Cellegy  Common  Stock  pursuant to Rule 144(k) under the
Securities Act.

     7.12 Tax Returns.  Cellegy shall cause to be prepared and filed on a timely
basis,  all Tax  Returns  for Vaxis for any  period  which ends on or before the
Closing  Date and for which Tax  Returns  have not been  filed as of such  date.
Cellegy  shall also cause to be prepared  and filed on a timely  basis,  all Tax
Returns of Vaxis for  periods  beginning  before and ending  after the  Closing.
Vaxis,  Cellegy and the  Stockholders  shall cooperate fully with each other and
make available to each other in a timely fashion such data and other information
as may reasonably be required for the preparation of any Tax Return of Vaxis for
a period ending on, prior to or

                                      -42-
<PAGE>

including the Closing and shall preserve such data and other  information  until
the expiration of any applicable limitation period under any applicable law with
respect to Taxes.

ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE TRANSACTION

     8.1 Conditions to Each Party's  Obligation to Effect the  Transaction.  The
respective  obligations of each party to effect the Transaction shall be subject
to the  satisfaction at or before the Closing of the following  conditions,  any
one of which may be waived by either or both of Vaxis and Cellegy:

         (a) No  preliminary  or  permanent  injunction  or  other  order by any
federal,  state or foreign court of competent  jurisdiction  which prohibits the
consummation of the Transaction  shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been  enacted,  entered,  issued,  promulgated  or  enforced  by  any  court  or
governmental  authority  which  prohibits or  restricts  the  completion  of the
Transaction.   All  authorizations,   consents,   orders  or  approvals  of,  or
declarations or filings with, and all expirations of waiting periods imposed by,
any governmental  entity (all of the foregoing,  "Consents") which are necessary
for the consummation of the Transaction, shall have been filed, occurred or been
obtained (all such permits, approvals, filings and consents and the lapse of all
such waiting periods being referred to as the "Requisite Regulatory  Approvals")
and all such Requisite Regulatory Approvals shall be in full force and effect.

         (b)  Cellegy  shall  have  received  all state  securities  or blue sky
permits and other authorizations necessary to issue the shares of Cellegy Common
Stock in exchange for the Purchased Shares and to complete the Transaction.

     8.2  Conditions  to  Obligation  of Vaxis to Effect  the  Transaction.  The
obligation of Vaxis to effect the  Transaction  shall be further  subject to the
satisfaction  at or before the Closing of the following  additional  conditions,
which may be waived by Vaxis:

         (a)  Cellegy  shall  have  performed  in  all  material   respects  its
obligations under this Agreement required to be performed by it at or before the
Closing and the  representations  and  warranties  of Cellegy  contained in this
Agreement  shall be true and correct in all respects at and as of the Closing as
if made at and as of such time,  except for such breaches as would not result in
a  Material  Adverse  Effect  on  Cellegy,  and  Vaxis  shall  have  received  a
certificate  of the  President  or  any  Vice  President  of  Cellegy  as to the
satisfaction of this condition.

         (b) Cellegy  shall have obtained the consent or approval of each Person
whose consent or approval shall be required in connection with the  transactions
contemplated  hereby  under  any  loan  or  credit  agreement,  note,  mortgage,
indenture,  lease,  license or other  agreement or instrument,  except those for
which  failure  to obtain  such  consents  and  approvals  would not  materially
adversely affect the consummation of the transactions  contemplated hereby or in
the aggregate  have a Material  Adverse  Effect on Cellegy and its  subsidiaries
taken as a whole.

                                      -43-
<PAGE>

         (c) There shall not have occurred  following the date of this Agreement
and before the Closing Date any Material Adverse Effect on Cellegy.

     8.3  Conditions to Obligations  of Cellegy to Effect the  Transaction.  The
obligations of Cellegy to effect the Transaction shall be further subject to the
satisfaction  at or before the Closing of the following  additional  conditions,
which may be waived by Cellegy:

         (a) Vaxis and each  Stockholder  shall have executed and delivered this
Agreement  and  performed in all material  respects its  obligations  under this
Agreement  required to be  performed  and  complied  with by it at or before the
Closing,  and the  representations  and warranties of Vaxis and the Stockholders
contained in this Agreement  shall be true and correct in all respects at and as
of the  Closing as if made at and as of such time,  except for such  breaches as
would not result in a Material  Adverse Effect on Vaxis,  and Cellegy shall have
received a Certificate of the President or any Vice President of Vaxis as to the
satisfaction of this condition.

         (b) Vaxis  shall have  obtained  the consent or approval of each Person
whose consent or approval shall be required in connection  with the  Transaction
and under any agreement or instrument required to be described in Section 4.9 of
the Disclosure Schedule.

         (c) As of the Closing Date, any outstanding options,  warrants or other
rights to acquire any securities of Vaxis shall have been terminated.

         (d) There shall not have occurred  following the date of this Agreement
and before the Closing Date any Material Adverse Effect on Vaxis.

         (e)  Parteq  Research  and  Development,  Inc.  ("Parteq")  shall  have
executed and  delivered to Cellegy (i) an agreement  relating to  assignment  of
certain  intellectual  property  to Cellegy  and  granting  Cellegy the right to
manage such intellectual property, on terms satisfactory to Cellegy, and (ii) an
amendment to the License  Agreement dated as of October 30, 1998, by and between
Parteq and Vaxis, in form and substance satisfactory to Cellegy.

         (f) There will not be any issued,  enacted or adopted, or threatened in
writing by any Governmental Authority, any order, decree, temporary, preliminary
or permanent injunction,  legislative enactment,  statute, regulation, action or
proceeding,  or any  judgment  or  ruling  by any  Governmental  Authority  that
prohibits or renders  illegal or imposes  limitations on: (i) the Transaction or
any other material transactions contemplated by this Agreement or (ii) the right
of any  Cellegy  subsidiary  to own,  retain,  use or operate  any of  Cellegy's
products,  properties or assets on or after  consummation  of the Transaction or
seeking  a  disposition  or  divesture  of any such  properties  or  assets.  No
litigation  or  proceeding  will be  threatened  in writing  or pending  for the
purpose or with the probable effect of enjoining or preventing the  consummation
of any of the  transactions  contemplated  by this  Agreement,  or  which  could
reasonably be expected to have a Material Adverse Effect on Vaxis or Cellegy.

         (g)  All  of  the  Stockholders   shall  have  delivered   certificates
representing  the Purchased Shares together with such instruments of transfer or
assignment as Cellegy shall reasonably request.

                                      -44-
<PAGE>

         (h) Vaxis shall have paid in full all Transaction  Expenses incurred by
it.

         (i) The officers and  directors of Vaxis that are  specified by Cellegy
shall have duly executed and delivered resignations as officers and directors of
Vaxis effective as of the Closing.

         (j) Each of the Founders and Dr.  Charles  Graham shall have executed a
Non-Competition Agreement.

         (k) Any and all  outstanding  Vaxis  preferred  shares  shall have been
converted into Vaxis Common Shares.

         (l) Each  Stockholder  who is a non-resident of the United States shall
have executed and delivered to Cellegy a Form W-8.

ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER

     9.1  Termination.  This  Agreement  may be terminated  and the  Transaction
contemplated hereby abandoned at any time before the Closing:

         (a) by mutual written consent of Cellegy and Vaxis;

         (b) by either Cellegy or Vaxis, if the Transaction  shall not have been
completed on or before December 31, 2001;  provided,  that the terminating party
shall not have  breached  in any  material  respect its  obligations  under this
Agreement  or  contributed  substantially  to the  delay  in  completion  of the
Transaction.

         (c) by Vaxis if there  shall have been any  breach of a  representation
and  warranty or covenant of Cellegy  hereunder  that would result in a Material
Adverse  Effect on Cellegy and, if such breach is curable,  such  default  shall
have not been  remedied  within ten days  after  receipt by Cellegy of notice in
writing from Vaxis  specifying  such breach and requesting  that it be remedied;
provided,  that such  ten-day  period  shall be extended  for so long as Cellegy
shall be making all reasonable  attempts to cure such breach,  unless the breach
is not susceptible of a cure; and provided further,  that the right to terminate
this Agreement pursuant to this subparagraph shall not be available if the party
seeking to terminate the Agreement is at that time in breach of this Agreement;

         (d) by Cellegy if there shall have been any breach of a  representation
and  warranty  or covenant of Vaxis  hereunder  that would  result in a Material
Adverse  Effect on Vaxis and, if such breach is curable,  such default shall not
have been  remedied  within ten days after receipt by Vaxis of notice in writing
from  Cellegy  specifying  such  breach  and  requesting  that  it be  remedied;
provided,  that such ten-day period shall be extended for so long as Vaxis shall
be making all reasonable attempts to cure such breach,  unless the breach is not
susceptible  of a cure;

                                      -45-
<PAGE>

and provided  further,  that the right to terminate this  Agreement  pursuant to
this  subparagraph  shall not be available if the party seeking to terminate the
Agreement is at that time in breach of this Agreement; and

         (e) by either  Cellegy or Vaxis if any court of competent  jurisdiction
in the United States or Canada or other United  States or Canadian  Governmental
Authority shall have issued an order, decree or ruling or taken any other action
restraining,  enjoining or otherwise prohibiting the Transaction and such order,
decree,  ruling or any other action shall have become final and  non-appealable;
provided,  that the party seeking to terminate this  Agreement  pursuant to this
clause (e) shall have used all reasonable  efforts to remove such order,  decree
or ruling.

     9.2 Effect of Termination. In the event of termination of this Agreement as
provided above,  this Agreement shall forthwith become of no further effect and,
except for a termination  resulting from a breach by a party of this  Agreement,
there shall be no liability or obligation on the part of either Cellegy or Vaxis
or their  respective  officers or  directors.  Moreover,  nothing  herein  shall
prejudice the ability of the  non-breaching  party from seeking damages from any
other party for any breach of this  Agreement,  including,  without  limitation,
legal fees and the right to pursue any remedy at law or in equity.  Upon request
therefor,  each party will  redeliver  or, at the option of the party  receiving
such request, destroy all documents, work papers and other material of any other
party relating to the transactions  contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing same.

     9.3  Amendment.  This  Agreement  may be  amended  by  means  of a  written
instrument  executed  by Cellegy and Vaxis at any time  before the  Closing,  or
after the Closing by Cellegy, Vaxis and the Representative.

     9.4 Extension;  Waiver. At any time before the Closing,  the parties hereto
may (a) extend the time for the  performance of any of the  obligations or other
acts  of  the  other  parties  hereto,   (b)  waive  any   inaccuracies  in  the
representations  and warranties  contained  herein or in any document  delivered
pursuant  hereto,  and  (c)  waive  compliance  with  any of the  agreements  or
conditions  contained herein. Any agreement on the part of a party hereto to any
such  extension or waiver shall be valid only if set forth in an  instrument  in
writing  signed on behalf of such  party.  Such  waiver  shall not  operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.

ARTICLE X
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION
AND REMEDIES, CONTINUING COVENANTS

     10.1  Survival of  Representations.  All  representations,  warranties  and
covenants  of Vaxis and the  Stockholders  contained in this  Agreement  and the
other  agreements,  certificates and documents  contemplated  hereby will remain
operative and in full force and effect,  regardless of any investigation made by
or on behalf of any of the parties to this  Agreement,  until that date which is
the earlier of (a) the  termination  of this  Agreement in  accordance  with its
terms or (b) eighteen  (18) months after the Closing  Date;  provided,  however,
that the representations and

                                      -46-
<PAGE>

warranties of Vaxis  contained in Sections 4.2, 4.3, 4.4, 4.11,  4.18,  4.19 and
4.20 and the  representations  and warranties of the  Stockholders  contained in
Sections 11.1-11.5 will remain operative and in full force and effect until that
date which is the earlier of (a) the termination of this Agreement in accordance
with its terms or (b)  forty-eight  (48) months  after the Closing Date (in each
case, such period referred to as the "Survival  Period").  All  representations,
warranties  and covenants of Cellegy  contained in this  Agreement and the other
agreements, certificates and documents contemplated hereby (other than covenants
which by their terms are required to be performed after the Closing Date,  which
shall survive for the period of time during which such  obligations are required
to be performed)  will  terminate at the earlier of (a) the  termination of this
Agreement in accordance with its terms or (b) the Closing.

     10.2 Agreement to Indemnify.

         (a) For the  Survival  Period,  each  Stockholder  agrees,  jointly and
severally, and to the extent of the limitation set forth in Section 10.3 hereof,
to indemnify and hold harmless Cellegy and Vaxis and their respective  officers,
directors, agents, representatives, stockholders and employees, and each person,
if any, who  controls or may control  Cellegy or Vaxis within the meaning of the
Securities Act or the Exchange Act (each hereinafter referred to individually as
a  "Cellegy   Indemnified  Person"  and  collectively  as  "Cellegy  Indemnified
Persons") from and against any and all Claims and expenses including  attorneys'
fees other  professionals'  and experts' fees,  and court or  arbitration  costs
(hereinafter  collectively  referred to as "Damages") incurred,  paid or accrued
(in  accordance  with U.S. or Canadian  GAAP) in connection  with or directly or
indirectly resulting from or arising out of:

                (i) any inaccuracy, misrepresentation, breach of, or default in,
                    any of the representations, warranties or covenants given or
                    made by Vaxis or any Stockholder in this Agreement or in the
                    Disclosure Schedule or in any certificate delivered by or on
                    behalf of Vaxis or any Stockholder pursuant hereto;

               (ii) Claims based on fraud,  willful  misrepresentation  or gross
                    negligence in connection with this Agreement; or

              (iii) any  Damages in  connection  with the patent  interferences,
                    oppositions,  and infringement or similar actions, claims or
                    proceedings  that may be brought  by or  against  Cellegy or
                    Vaxis relating to the Vaxis patents and patent  applications
                    set  forth  on  Section  10.2  of  the  Disclosure  Schedule
                    (excluding  any actions,  claims or  proceedings  brought by
                    Cellegy   against  Vaxis  not  relating  to  this  Agreement
                    ("Patent Actions").

         (b) Any Claim made by a Cellegy  Indemnified  Person under this Section
10.2 must be raised in a Notice of Claim  delivered  to the  Representative  (as
later defined) by no later than the applicable Survival Period and, if raised by
such date, such claim shall survive the Survival  Period until final  resolution
thereof.  Escrow  Funds,  other than  Escrow  Funds  having a value equal to the
amount of Damages asserted in any Claim which has not been resolved

                                      -47-
<PAGE>

pursuant to the terms hereof prior to the applicable  Escrow Release Date, shall
be released to the  Stockholders  on the Escrow  Release Date or, in the case of
any such withheld Escrow Funds, upon the final resolution of such Claim.

         (c) The amount  which any party is or may be  required  to pay to or on
behalf of any other  person  pursuant  to Article X shall be reduced  (including
retroactively) by (i) any amounts received by a Cellegy  Indemnified Person from
an insurance  carrier or paid and resolved by an insurance  carrier on behalf of
the insured (in a manner which shall result in no further liability to a Cellegy
Indemnified  Person),  in either case net of any applicable premium  adjustment,
retrospectively rated premium,  deductible,  retention,  cost or reserve paid or
held by or for the benefit of the insured  ("Insurance  Proceeds") or (ii) other
amounts actually recovered by or on behalf of such Cellegy Indemnified Person in
reduction of the related Damages. For greater certainty,  Cellegy agrees that in
any case in which it has been successful, in whole or in part, in the defense of
any Patent  Action  brought by a third party against  Cellegy or Vaxis,  Cellegy
shall  take  reasonable  commercial  steps to  recover  the costs  and  expenses
incurred by Cellegy in connection with such defense (including,  but not limited
to, reasonable attorneys' fees, other professionals' and experts' fees and court
or arbitration  costs). If a Cellegy  Indemnified Person shall have received the
payment  required by this  Agreement  from an  indemnifying  party in respect of
Damages and shall  subsequently  actually  receive  Insurance  Proceeds or other
amounts in respect of such Damages as  specified  above,  then such  indemnified
person  shall pay to such  indemnifying  party a sum equal to the  amount of any
such double recovery actually received.

     10.3 Limitations.

         (a) The  maximum  amount of Damages  for which a  Stockholder  shall be
liable  pursuant  to  Section  10.2(a)  shall be the  amount of  Escrowed  Funds
withheld  and  deposited  into  the  Escrow  pursuant  to  Section  3.7(a)  (the
"Indemnity Cap"); provided,  however, in the event of Claims based on any breach
or inaccuracy of Sections 11.1-11.5 by a Stockholder, the Damages shall first be
paid from the amount of Escrowed  Funds held for that  Stockholder  and then, if
not satisfied,  pro-rata among the remaining  Stockholders  in proportion to the
Escrowed Funds  remaining.  The value of each share of Cellegy Common Stock held
in escrow shall, for such purposes of satisfying  claims for Damages,  be deemed
to equal the  Cellegy  Average  Price  determined  as of the time the shares are
forfeited in satisfaction of an  indemnification  obligation  hereunder.  In the
event of a capital change after the Closing, the Cellegy Average Price Per Share
will, for purposes of this Section,  be proportionally  and equitably  adjusted.
For income tax  purposes,  the use of  Cellegy  Common  Stock to satisfy a Claim
shall be treated as a purchase price adjustment.

         (b) The  indemnification  provided  for in Section 10.2 shall not apply
unless and until the aggregate Damages for which one or more Cellegy Indemnified
Persons  seeks or has  sought  indemnification  hereunder  exceeds a  cumulative
aggregate  of $50,000 (the  "Basket"),  in which event the  Stockholders  shall,
subject to the other  limitations  herein,  be liable to  indemnify  the Cellegy
Indemnified Persons for all Damages;  provided,  however,  that the Basket shall
not apply to any and all Damages incurred, paid or accrued in connection with or
directly or

                                      -48-
<PAGE>

indirectly  resulting  from or  arising  out of Claims  based on fraud,  willful
misrepresentation or gross negligence.

         (c) With  respect to Patent  Actions  brought in the  Survival  Period,
Cellegy may withhold damages without regard to the Basket, but (i) the aggregate
amount of  reimbursable  Damages  under this  Article X for Patent  Actions with
respect to claims,  actions or  proceedings  initiated by Cellegy or Vaxis shall
not exceed U.S.$500,000,  and (ii) only Escrow Funds that consist of portions of
the  Earn-Out   Consideration  shall  be  subject  to  the  provisions  of  this
subparagraph (c).

     10.4 Appointment of Representative.  By entering into the Transaction, each
of the Stockholders  approves the designation of and designates John Molloy, for
as long as he is employed by Parteq Research and Development Innovations Inc. or
an affiliate  thereof  ("Parteq")  (and if Mr.  Molloy is no longer so employed,
then Parteq may designate  another officer of Parteq to succeed Mr. Molloy),  as
the representative of the Stockholders and as the attorney-in-fact and agent for
and on behalf of each Stockholder (the  "Representative") with respect to Claims
for  indemnification  under  Article X and any other Claims of or other  matters
affecting any  Stockholder  arising out of or relating to this  Agreement or the
transactions  contemplated  hereby,  including  without  limitation any disputes
concerning  the  payment  of  Earn-Out  Consideration,  and  the  taking  by the
Representative  of any and all actions and the making of any decisions  required
or permitted to be taken by the Representative  under this Agreement,  including
the exercise of the power to: (a)  authorize  the release or delivery to Cellegy
of Escrow  Funds in  satisfaction  of  indemnity  claims by Cellegy or any other
Cellegy Indemnified Person pursuant to Article X; (b) agree to, negotiate, enter
into settlements and compromises of, and comply with orders of courts and awards
of arbitrators with respect to, such Claims; (c) arbitrate,  resolve,  settle or
compromise any claim for indemnity made pursuant to Article 10; and (d) take all
actions necessary in the judgment of the  Representative  for the accomplishment
of the  foregoing.  The  Representative  will have authority and power to act on
behalf of each Stockholder with respect to the disposition,  settlement or other
handling of all Claims under Article X or otherwise under this Agreement and all
rights or obligations arising under Article X or otherwise under this Agreement.
The  Representative  shall,  forthwith  upon  receipt of any  correspondence  or
documentation arising out of or relating to this Agreement,  send a copy of such
correspondence and documentation to each of the Stockholders. The Representative
shall  also  provide  to each of the  Stockholders  a  minimum  of five (5) full
business  days written  notice prior to taking any action in the exercise of the
powers set forth in clauses (a)-(d) above. The Stockholders will be bound by all
actions taken and documents  executed by the  Representative  in connection with
Article X or  otherwise  under this  Agreement,  and Cellegy will be entitled to
rely  on any  action  or  decision  of the  Representative.  In  performing  the
functions specified in this Agreement,  the Representative will not be liable to
any Stockholder in the absence of gross negligence or willful  misconduct on the
part of the  Representative.  The  Stockholders  shall  severally  indemnify the
Representative  and hold him  harmless  against any loss,  liability  or expense
incurred  without  gross  negligence  or willful  misconduct  on the part of the
Representative  and  arising  out of or in  connection  with the  acceptance  or
administration  of  his or her  duties  hereunder.  Cellegy  (or,  in  Cellegy's
discretion, Vaxis) shall pay the Representative,  for his services hereunder, an
annual fee of $6,000 per year during the  Survival  Period,  with the first such
payment due within  thirty (30) days after the Closing Date and future  payments
due before each anniversary of the Closing

                                      -49-
<PAGE>

Date,  and  shall  also pay any  out-of-pocket  costs  and  expenses  reasonably
incurred  by  the  Representative  in  connection  with  actions  taken  by  the
Representative pursuant to the terms of Article X (including the hiring of legal
counsel and the  incurring  of legal fees and costs),  up to a maximum of $5,000
per year (and  Cellegy  may request  that the  Representative  submit  customary
documentation  concerning such expenses).  However, Cellegy shall be entitled to
offset and withhold  from any  Earn-Out  Consideration  that would  otherwise be
payable to the  Stockholders  hereunder the full amount,  in proportion to their
respective share of the Earn-Out Consideration, of all such payments pursuant to
the preceding sentence.

     10.5 Notice of Claim. Cellegy shall give written notice of a Claim executed
by an officer of Cellegy (a "Notice of Claim")  whether  for its own  Damages or
for  Damages  incurred  by any other  Cellegy  Indemnified  Person.  Cellegy may
deliver a Notice of Claim at any time Cellegy or any other  Cellegy  Indemnified
Person suffers Damages or is subject to a claim,  demand, suit, action, cause of
action or other dispute that may give rise to a Claim. In the event that Cellegy
delivers a Notice of Claim on its own behalf or is requested to deliver a Notice
of Claim on behalf of any other Cellegy Indemnified  Person,  Cellegy will do so
promptly after Cellegy  becomes aware of the existence of any Claim by a Cellegy
Indemnified  Person for indemnity from the Stockholders under Article X. Cellegy
shall deliver a Notice of Claim before the expiration of the applicable Survival
Period, arising from or relating to:

         (a) any inaccuracy, misrepresentation, breach of, or default in, any of
the  representations,  warranties  or  covenants  given or made by Vaxis in this
Agreement or in the Disclosure Schedule or in any certificate delivered by Vaxis
or an officer of Vaxis pursuant hereto; or

         (b) the  assertion,  whether orally or in writing,  against  Cellegy or
against any other Cellegy  Indemnified Person of a Claim,  inquiry or proceeding
brought by a third party against such  Indemnified  Person (in each such case, a
"Third-Party  Claim") that is based upon, or includes  assertions that would, if
true,  constitute any inaccuracy,  misrepresentation,  breach of, or default in,
any of the  representations,  warranties or covenants  given or made by Vaxis in
this Agreement or in the Disclosure Schedule or in any certificate  delivered by
or on behalf of Vaxis or an officer of Vaxis pursuant hereto.

     Until the expiration of the  applicable  Survival  Period,  no delay on the
part of Cellegy in giving the  Representative a Notice of Claim will relieve the
Representative  or any Stockholder  from any of its obligations  under Article X
unless (and then only to the extent) that the Representative or the Stockholders
are materially prejudiced thereby.

     10.6 Defense of Third-Party Claims.

     Cellegy  shall  defend any  Third-Party  Claim,  and the costs and expenses
incurred by Cellegy in connection with such defense (including,  but not limited
to, reasonable attorneys' fees, other professionals' and experts' fees and court
or  arbitration  costs)  shall be included in the Damages for which  Cellegy may
seek  indemnity  pursuant  to a Claim  made by any  Cellegy  Indemnified  Person
hereunder.

                                      -50-
<PAGE>

     The Representative shall have the right to receive copies of all pleadings,
notices and  communications  with respect to the Third-Party Claim to the extent
that  receipt  of such  documents  by the  Representative  does not  affect  any
privilege  relating to the Cellegy  Indemnified  Person,  and may participate in
settlement  negotiations  with  respect  to the  Third-Party  Claim.  No Cellegy
Indemnified  Person  shall  enter into any  settlement  of a  Third-Party  Claim
without the prior written consent of the Representative (which consent shall not
be  unreasonably  withheld),  provided,  that if the  Representative  shall have
consented in writing to any such settlement,  then the Representative shall have
no power or authority to object to any Claim by any Cellegy  Indemnified  Person
for  indemnity  under  Section 10.2 for the amount of such  settlement;  and the
Stockholders  will remain  responsible  to  indemnify  the  Cellegy  Indemnified
Persons for all Damages they may incur arising out of,  resulting from or caused
by the Third-Party Claim to the fullest extent provided in Article X.

     10.7  Contents of Notice of Claim.  Each  Notice of Claim by Cellegy  given
pursuant to Section 10.5 will contain the following information:

         (a) that  Cellegy  has  incurred,  paid or accrued  or, in good  faith,
believes  it will have to incur,  pay or  accrue,  Damages  and,  if  reasonably
determinable  at the time,  a good faith  estimate  of the  aggregate  amount of
Damages  arising  from such  Claim  (which  amount  may be the amount of damages
claimed by a third party in an action  brought  against any Cellegy  Indemnified
Person based on alleged facts,  which if true,  would give rise to liability for
Damages to such Cellegy Indemnified Person under Article X); and

         (b) a brief description, in reasonable detail (to the extent reasonably
available to Cellegy), of the facts,  circumstances or events giving rise to the
alleged  Damages  based on Cellegy's  good faith belief  thereof,  including the
identity and address of any third-party claimant and copies of any formal demand
or complaint,  the amount of Damages, the date each such item was incurred, paid
or accrued, or the basis for such anticipated liability, and the specific nature
of the breach to which such item is related.

     10.8  Resolution  of Notice of Claim.  Each  Notice of Claim  delivered  by
Cellegy will be resolved as follows:

         (a)  Uncontested  Claims.  In the event that,  within ten calendar days
after a Notice of Claim is received by the  Representative,  the  Representative
does not  contest  such  Notice of Claim in writing to  Cellegy as  provided  in
Section  10.8(b)  (an  "Uncontested   Claim"),   the   Representative   will  be
conclusively  deemed to have consented,  on behalf of all  Stockholders,  to the
recovery  by the  Cellegy  Indemnified  Person  of the full  amount  of  Damages
specified in the Notice of Claim in accordance with this Article X, and, without
further notice,  to have stipulated to the entry of a final judgment for damages
against the Stockholders for such amount in any court having  jurisdiction  over
the matter.

         (b)  Contested  Claims.  In the  event  that the  Representative  gives
Cellegy  written  notice  contesting  all or any portion of a Notice of Claim (a
"Contested  Claim")  within the ten  calendar  day period  specified  in Section
10.8(a),  then such  Contested  Claim will be  resolved  by either (A) a written
settlement agreement executed by Cellegy and the Representative or

                                      -51-
<PAGE>

(B) in the absence of such a written settlement agreement,  by the judgment of a
court of competent jurisdiction.

     10.9  Distribution  Upon Termination of Escrow Period.  Within ten business
days following the applicable Escrow Release Date,  Cellegy shall deliver to the
Stockholders  all of the Escrow  Funds in excess of any  amount of Escrow  Funds
that  Cellegy  determines  in good faith may be  necessary  to satisfy  any then
unsatisfied,  unresolved or contested Claims for Damages specified in any Notice
of Claim delivered to the Representative before the Escrow Release Date. As soon
as all such Claims have been  finally  resolved,  Cellegy  shall  deliver to the
Stockholders  all remaining Escrow Funds not applied to the satisfaction of such
Claims.

     10.10 Offset of Earn-Out Consideration. Cellegy shall be entitled to offset
the amount of any Damages from any Earn-Out  Consideration  that would otherwise
become  payable in accordance  with the terms of this  Agreement for a period of
forty-eight (48) months after the Closing Date.

     10.11 Limitation of Escrow Agent's Liability.

         (a) The Escrow Agent will incur no liability with respect to any action
taken or  suffered by it in reliance  upon any notice,  direction,  instruction,
consent,  statement  or other  document  believed  by it to be genuine  and duly
authorized,  nor for any  other  action  or  inaction,  except  its own  willful
misconduct.  The Escrow Agent shall have no duty to inquire into or  investigate
the  validity,  accuracy  or content  of any  document  delivered  to it. In all
questions arising under this Agreement,  the Escrow Agent may rely on the advice
or opinion of counsel,  and for anything done, omitted or suffered in good faith
by the Escrow Agent based on such advice, the Escrow Agent will not be liable to
anyone.  The Escrow  Agent  will not be  required  to take any action  hereunder
involving any expense unless the payment of such expense is made or provided for
in a manner satisfactory to it.

         (b) In the event  conflicting  demands are made or conflicting  notices
are served upon the Escrow  Agent with respect to the Escrow  Funds,  the Escrow
Agent will have the absolute right, at the Escrow Agent's election, to do either
or both of the following: (i) resign so a successor can be appointed pursuant to
Section  10.12  hereof or (ii) file a suit in  interpleader  and obtain an order
from a court of competent  jurisdiction  requiring the parties to interplead and
litigate in such court their several claims and rights among themselves.  In the
event such interpleader suit is brought,  the Escrow Agent will thereby be fully
released and discharged from all further  obligations imposed upon it under this
Agreement,  and  Cellegy  will  pay  the  Escrow  Agent's  costs,  expenses  and
attorney's  fees  expended  or  incurred  by the Escrow  Agent  pursuant  to the
exercise of Escrow Agent's rights under this Section 10.11(b).  However, Cellegy
shall be entitled to reimbursement  from the Stockholders  (solely out of Escrow
Funds) of such  fees and  expenses  of the  Escrow  Agent in the  event  Cellegy
prevails in such dispute.

         (c) The Escrow Agent may execute any of its powers or  responsibilities
hereunder and exercise any rights hereunder either directly or by or through the
Escrow Agent's agents or attorneys. The Escrow Agent shall have no liability for
the conduct of any outside attorneys, accountants or other similar professionals
it retains. Nothing in this Agreement shall

                                      -52-
<PAGE>

be deemed to impose upon  Escrow  Agent any duty to qualify to do business or to
act as a fiduciary or otherwise in any jurisdiction.

     10.12  Successor  Escrow  Agent.  In the event  the  Escrow  Agent  becomes
unavailable or unwilling to continue in its capacity herewith,  the Escrow Agent
may resign and be discharged from its duties or obligations  hereunder by giving
notice of its  resignation to the parties to this  Agreement,  specifying a date
not less than ten days following such notice date of when such  resignation will
take  effect.  Cellegy  will  designate  a successor  Escrow  Agent prior to the
expiration of such ten-day  period by giving  written notice to the Escrow Agent
and the Representative. The Escrow Agent will promptly transfer the Escrow Funds
to such designated successor.

ARTICLE XI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STOCKHOLDERS

         Each of the  Stockholders  severally  and not  jointly  represents  and
warrants to Cellegy and Vaxis as follows:

     11.1  Binding  Obligation.  Each  Stockholder  has  the  right  (and,  if a
corporation,  the power and authority) to enter into this Agreement, to sell the
Stockholder's  Purchased Shares in the manner contemplated herein and to perform
all of the Stockholder's  obligations under this Agreement.  This Agreement is a
legal,  valid and binding  obligation of each Stockholder,  enforceable  against
each Stockholder in accordance with its terms subject to:

     (a)  bankruptcy,  insolvency,  moratorium,  reorganization  and other  laws
          relating  to  or  affecting  the  enforcement  of  creditors'   rights
          generally, and

     (b)  the fact that equitable  remedies,  including the remedies of specific
          performance and injunction, may only be granted in the discretion of a
          court.

     11.2 No Other  Purchase  Agreements.  Except in respect of any rights under
agreements  which shall be exercised in full or cancelled  prior to the Closing,
no person has any agreement, option, understanding or commitment or any right or
privilege  (whether by law,  pre-emptive or contractual)  capable of becoming an
agreement, option or commitment,  including convertible securities,  warrants or
convertible obligations of any nature, for the purchase, subscription, allotment
or issuance of, or conversion into, any of the unissued shares in the capital of
Vaxis or any securities of Vaxis,  except for any such pre-emptive  rights which
have been waived in writing.

     11.2  Ownership.   Each  Stockholder  represents  and  warrants  that  such
Stockholder  is the  registered  and  beneficial  owner of the Purchased  Shares
listed opposite such Stockholder's  name in Exhibit 3.1(a) annexed hereto,  free
and clear of all liens, charges, security interests,  Encumbrances and rights of
others.

     11.3  Authority  Relative  to  this  Agreement.  Each  Stockholder,   if  a
corporation,  has the corporate  power to enter into this Agreement and to carry
out its obligations hereunder. The

                                      -53-
<PAGE>

execution  and  delivery  of  this  Agreement  by  each   Stockholder   and  the
consummation by each Stockholder of the Transaction have been duly authorized by
any individual,  corporate, partnership or other action necessary on the part of
each of the  Stockholders,  if necessary,  and no other corporate or stockholder
proceedings  on the  part of any  Stockholder  are  necessary  to  approve  this
Agreement or the transactions  contemplated hereby. This Agreement has been duly
and validly executed and delivered by each Stockholder and constitutes the valid
and binding agreement of each Stockholder,  enforceable against each Stockholder
in accordance with its terms,  subject to applicable  bankruptcy,  insolvency or
other  similar laws  relating to  creditors'  rights and general  principles  of
equity.

     11.4  Consents  and  Approvals;   No  Violations.   Except  for  applicable
requirements  of the  Securities  Act and the Securities Act (Ontario) no filing
with,  and no  permit,  authorization,  consent  or  approval  of, any public or
governmental  body  or  authority  is  necessary  for  the  consummation  by any
Stockholder  of the  Transaction.  Neither the  execution  and  delivery of this
Agreement by any  Stockholder,  nor the  consummation  by any Stockholder of the
Transaction,  nor  compliance  by any  Stockholder  with  any of the  provisions
hereof, will (a) result in any breach of the Articles of Incorporation or Bylaws
of any Stockholder  (if a corporation),  (b) result in a violation or breach of,
or  constitute  (with or without  due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation,  acceleration or change
in the award, grant, vesting or determination) under, require the consent of any
third party under, or give rise to creation of any  Encumbrance  upon any of the
respective  properties  or assets of any  Stockholder  under,  any of the terms,
conditions or provisions of any note, bond, mortgage,  indenture, deed of trust,
license,  contract,  lease,  agreement,   arrangement  or  other  instrument  or
obligation to which any Stockholder is a party or by which any of them or any of
their  properties  or  assets  may be  bound or (c)  violate  any  order,  writ,
injunction, decree, statute, rule or regulation applicable to any Stockholder or
any of  their  respective  properties  or  assets.  No vote of  Stockholders  is
necessary to approve this Agreement and the transactions contemplated hereby.

     11.5  Residence of  Stockholder.  Except for those  Stockholders  having an
address  outside  of  Canada as set forth in  Exhibit  3.1(a) of the  Disclosure
Schedule,  each  Stockholder is not a non-resident of Canada for the purposes of
the Income Tax Act (Canada).

     11.6 Investment Representations and Warranties of Stockholder.  Each of the
Stockholders  severally and not jointly  represents  and warrants to Cellegy and
Vaxis as follows:

         (a)  "Accredited"  Investor.  Only if a Stockholder so indicates on the
signature page to this Agreement, Stockholder is either (A) a natural person and
either  (x)  Stockholder's  individual  net  worth,  or  joint  net  worth  with
Stockholder's  spouse, will, at the time of the investment in the Cellegy Common
Stock, exceed US$1,000,000 or (y) Stockholder had an individual income in excess
of  US$200,000  in each of the two  most  recent  years  or  joint  income  with
Stockholder's  spouse in excess of  US$300,000  in each of those years and has a
reasonable  expectation  of reaching the same income level in the current  year,
(B) a corporation  with total assets in excess of  US$5,000,000,  not formed for
the specific  purpose of acquiring the shares of Cellegy Common Stock, or (C) an
entity  all of the  equity  owners of which are as  specified  in (A) or (B) (an
"Accredited Stockholder").

                                      -54-
<PAGE>

         (b) Holding For Own Account.  Stockholder  is  acquiring  the shares of
Cellegy Common Stock for  Stockholder's  own account,  for  investment  purposes
only, and not with a view toward the resale or  distribution  thereof within the
meaning of the Securities  Act, except  pursuant to effective  registrations  or
qualifications relating thereto under the Securities Act and applicable Canadian
and U.S.  federal,  provincial and state securities or blue sky laws or pursuant
to an exemption therefrom.

         (c)  Stockholder's  Business  Experience.  Stockholder  has,  alone  or
together with Stockholder's Stockholder  representative,  if any, such knowledge
and experience in financial and business  matters so that Stockholder is capable
of evaluating  the relative  merits and risks of acquiring the shares of Cellegy
Common Stock.  Stockholder  has adequate  means of providing for its, his or her
current  economic  needs and possible  personal  contingencies,  has no need for
liquidity in its, his or her  investment in Cellegy and is able  financially  to
bear the risks of such investment.

         (d)  Availability of  Information.  Stockholder  acknowledges  that all
documents,  records and books pertaining to the investment in Cellegy  resulting
from the Transaction that Stockholder or Stockholder's  representative,  if any,
has  requested  have been made  available or delivered  to  Stockholder,  to the
extent that Cellegy possesses such information without  unreasonable  efforts or
expense.

         (e)  Opportunity  to  Ask  Questions.   Stockholder  or   Stockholder's
Stockholder representative,  if any, has had an opportunity to discuss Cellegy's
business,  management and financial affairs with Cellegy's management and to ask
questions of and receive answers from Cellegy,  or a person or persons acting on
behalf of Cellegy, concerning the business of Cellegy.  Stockholder acknowledges
that all  such  questions,  if any,  have  been  answered  to the  Stockholder's
satisfaction  and that  Stockholder has received all  information  about Cellegy
which Stockholder deems necessary in connection with the Transaction.

         (f) Investment  Representation Article.  Stockholder has carefully read
this Article XI and, to the extent Stockholder believes necessary, has discussed
with Stockholder's  counsel the representations,  warranties and agreements that
Stockholder  makes  herein and the  applicable  limitations  upon  Stockholder's
resale of the Cellegy Common Stock.

         (g) Cellegy Information.  Stockholder has the opportunity to review and
has reviewed  each of the following  documents:  (i) Annual Report of Cellegy on
Form 10-K for the fiscal year ended December 31, 2000, (ii) Quarterly Reports of
Cellegy on Form 10-Q for the quarterly periods ended March 31, 2001 and June 30,
2001 and September 30, 2001, and (iii)  definitive Proxy Statement for Cellegy's
Annual Meeting of  Stockholders  held in 2001.  Stockholder is also aware of and
acknowledges the following:

                (i) that no  federal  or state  agency  has made any  finding or
                    determination regarding the fairness of this investment,  or
                    any  recommendation  or  endorsement  of the Cellegy  Common
                    Stock;

               (ii) that neither the officers,  directors, agents, affiliates or
                    employees  of  Cellegy,  nor any  other  person  other  than
                    Cellegy, has expressly or by

                                      -55-
<PAGE>

                    implication,  made any representation or warranty concerning
                    Cellegy other than as set forth in this Agreement; and

              (iii) that  the past  performance  or  experience  of  Cellegy  or
                    Cellegy's officers,  directors, agents or employees will not
                    in any way indicate or predict the results of the  ownership
                    of Cellegy Common Stock or of Cellegy's activities.

         (h) Unregistered  Cellegy Common Stock;  Restrictions on Transfer.  (a)
Stockholder  understands  that:  (A) the  Cellegy  Common  Stock  has  not  been
registered under the Securities Act or the securities laws of any state or other
jurisdiction in reliance upon exemptions from such registration requirements for
non-public  offerings;  (B) the Cellegy Common Stock may not be sold, pledged or
otherwise   transferred   except   pursuant  to   effective   registrations   or
qualifications  relating  thereto under the Securities Act and other  applicable
securities  laws or pursuant to an exemption  therefrom;  and (C) Cellegy is not
under any  obligation to register or qualify the Cellegy  Common Stock under the
Securities Act or any other applicable securities laws, or to take any action to
make any exemption from any such registration provisions available.

         (i) No Public Solicitation.  Stockholder represents that at no time was
Stockholder presented with or solicited by any general mailing,  leaflet, public
promotional  meeting,   newspaper  or  magazine  article,  radio  or  television
advertisement,  or any other form of general advertising or general solicitation
in connection with the Transaction.

         (j)  Principal  Residence or Principal  Place of Business.  The address
shown on the schedule of Stockholders  separately  delivered by Vaxis to Cellegy
before the Closing is  Stockholder's  principal  residence if  Stockholder is an
individual or Stockholder's principal place of business if it is a corporation.

     11.7  Additional  Covenants  of  Stockholders.  Each  of  the  Stockholders
severally and not jointly covenants to Cellegy and Vaxis as follows:

         (a) Lock-Up  Period.  Stockholder  agrees to comply  with the  transfer
restrictions set forth in Section 7.10 above.

         (b) Securities Law  Restrictions.  Stockholder will not sell, assign or
transfer any of the Cellegy  Common Stock  received by Stockholder in connection
with the Acquisition Agreement except (i) pursuant to an effective  registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations  of Rule 144  promulgated  under the  Securities  Act, or (iii) in a
transaction  which,  in the opinion of  independent  counsel to the  Stockholder
delivered  to  Cellegy  and  satisfactory  to  Cellegy,  is not  required  to be
registered under the Act.

         Cellegy  shall place the  following  legend (and any other  appropriate
legend) on each certificate or instrument  representing shares of Cellegy Common
Stock acquired under this Agreement:

          THE SHARES  EVIDENCED  BY THIS  CERTIFICATE  HAVE NOT BEEN  REGISTERED
     UNDER THE  SECURITIES  ACT OF 1933,  AS

                                      -56-
<PAGE>

     AMENDED (THE "ACT"),  OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE
     AND MAY NOT BE SOLD,  TRANSFERRED OR OTHERWISE  DISPOSED OF EXCEPT PURSUANT
     TO AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE ACT OR IN A TRANSACTION
     WHICH IS NOT  SUBJECT TO THE  REGISTRATION  REQUIREMENTS  OF THE ACT OR ANY
     APPLICABLE  SECURITIES  OR BLUE SKY LAWS AND, IN THE CASE OF A  TRANSACTION
     NOT  SUBJECT  TO SUCH  REGISTRATION  REQUIREMENTS,  UNLESS  THE  ISSUER HAS
     RECEIVED AN OPINION OF COUNSEL TO THE HOLDER REASONABLY  SATISFACTORY TO IT
     THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT.

     Cellegy  agrees that no opinion of counsel  shall be required in connection
with a request to remove the foregoing  legend in  connection  with routine Rule
144 sale transactions pursuant to customary  documentation  including a Form 144
and brokers' and sellers'  representation letters and will instruct its transfer
agent to such effect.

         (c) Stop Transfer Instructions; No Requirement to Transfer. Stockholder
agrees that, in order to ensure  compliance  with the  restrictions  referred to
herein,  Cellegy  may issue  appropriate  "stop  transfer"  instructions  to its
transfer  agent.  Cellegy  shall  not  be  required  (i)  to  transfer  or  have
transferred  on its  books  any  Cellegy  Common  Stock  that  have been sold or
otherwise transferred in violation of any of the this Agreement or (ii) to treat
as owner of such  Cellegy  Common  Stock or to  accord  the right to vote or pay
dividends to any  Stockholder  or other  transferee to whom such Cellegy  Common
Stock shall have been so  transferred  in  violation  of any  provision  of this
Agreement.

     11.8 Regulation S,  Representations and Warranties.  Except with respect to
the one  Stockholder  who has been  previously  identified to Cellegy as being a
"U.S. person" (which Stockholder shall not be deemed to make the representations
and warranties in this Section 11.8):

         (a) Compliance With Laws.  Stockholder hereby represents that he or she
has satisfied himself or herself as to the full observance of the laws of his or
her  jurisdiction  in  connection  with the  transactions  contemplated  by this
Agreement  and the  issuance of the  Cellegy  Common  Stock to the  Stockholder,
including  (i) the legal  requirements  within his or her  jurisdiction  for the
acquisition of the Cellegy Common Stock, (ii) any foreign exchange  restrictions
applicable to such  acquisition,  (iii) any  governmental or other consents that
may need to be obtained, and (iv) the income tax and other tax consequences,  if
any, that may be relevant to the  acquisition,  purchase,  holding,  redemption,
sale or other transfer of the Cellegy Common Stock.  The  Stockholder's  initial
receipt,  and his or her continued beneficial  ownership,  of the Cellegy Common
Stock will not violate  any  applicable  securities  or other laws of his or her
jurisdiction.

         (b)  Offshore  Transaction.  The offer and sale of the  Cellegy  Common
Stock to the Stockholder was made in an offshore transaction (as defined in Rule
902(h) of Regulation  S). The offer to Stockholder to acquire the Cellegy Common
Stock was not made to any person within the United States  (which,  for purposes
of this Agreement, includes the

                                      -57-
<PAGE>

territories and possessions of the United States, any State of the United States
and the District of Columbia),  and, at the time  Stockholder  voted in favor of
the Transaction  and acquired the Cellegy Common Stock,  Stockholder was outside
the United States.  Stockholder  certifies that it is not a U.S. person and that
it is not acquiring  the Cellegy  Common Stock for the account or benefit of any
U.S. person.

         (c) Offering Restrictions. Stockholder acknowledges and agrees that the
Cellegy Common Stock (i) have not been registered  under the Act, will be issued
under an exemption  from  registration  under the Securities Act provided for in
Regulation S promulgated  under the Securities Act  ("Regulation S") and (ii) in
addition to any other  restrictions set forth herein, may not be offered or sold
in the United States or to any U.S. person (other then distributors)  unless the
Cellegy  Common Stock are  registered  under the  Securities Act or an exemption
from the registration requirements of the Act is available.

         (d) Resale  Restrictions.  Stockholder  acknowledges  and  agrees  that
hedging  transactions  involving  the Cellegy  Common Stock may not be conducted
unless in compliance  with the  Securities  Act.  Stockholder  acknowledges  and
agrees  that  during the one year  period  beginning  on the  Clsoing  Date (the
"Restriction  Period"): (i) Stockholder may resell the Cellegy Common Stock only
in accordance  with the  provisions  of  Regulation S, pursuant to  registration
under  the  Securities  Act or  pursuant  to an  available  exemption  from  the
registration requirements of the Securities Act; (ii) Stockholder may not engage
in hedging transactions with regard to the Cellegy Common Stock prior to the end
of the Restriction Period; and (iii) (A) any offer or sale of the Cellegy Common
Stock  shall not be to a U.S.  person or for the  account  or  benefit of a U.S.
person; (B) prior to such purchase, the Stockholder of such Cellegy Common Stock
shall certify that (1) it is not a U.S. person and is not acquiring such Cellegy
Common  Stock for the account or benefit of any U.S.  person or (2) it is a U.S.
person who purchased  such Cellegy  Common Stock in a  transaction  that did not
require  registration under the Securities Act; (C) prior to such purchase,  the
Stockholder  of such  Cellegy  Common  Stock  shall  agree to resell  during the
Restriction  Period  such  Cellegy  Common  Stock  only in  accordance  with the
provisions of Regulation S,  pursuant to  registration  under the  Securities or
pursuant to an exemption from the registration  requirements of the Act; and (D)
prior to such purchase, the Stockholder of such Cellegy Common Stock shall agree
that  hedging  transactions  including  such  Cellegy  Common  Stock  may not be
conducted unless in compliance with the Securities Act.

         (e) No  Directed  Selling  Efforts.  No  directed  selling  efforts (as
defined in Rule  902(c) of  Regulation  S) were made in the United  States,  the
Stockholder is not acquiring the Cellegy Common Stock for the account or benefit
of any U.S. Person and Stockholder  acknowledges and agrees that it is not aware
of any activity initiated for the purpose or with the effect of conditioning the
market in the United States for the Cellegy Common Stock offered to it.

         (f) Stop Transfer  Instructions  and Legends.  Stockholder  understands
that  Cellegy  will  issue,  and  Stockholder  consents  to the issuing of, stop
transfer  instructions to Cellegy's transfer agent with respect to the Purchased
Shares to assure compliance with the Securities Act. Stockholder consents to the
placement of such legends on each  certificate  representing  the Cellegy Common
Stock as Cellegy may deem  reasonably  appropriate  to reflect the  restrictions
imposed by Regulation S.

                                      -58-
<PAGE>

         (g) Definition of U.S. Person. A "U.S. person", as used in this Article
XI,  means (i) any  natural  person  resident  in the  United  States;  (ii) any
partnership  or  corporation  organized  or  incorporated  under the laws of the
United States; (iii) any estate of which any executor or administrator is a U.S.
person;  (iv) any trust of which any trustee is a U.S. person; (v) any agency or
branch  of  a  foreign   entity   located  in  the  United   States;   (vi)  any
non-discretionary  account or similar  account  (other  than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person;
(vii) any  discretionary  account or similar  account  (other  than an estate or
trust) held by a dealer or other  fiduciary  organized,  incorporated  or (if an
individual)  resident  in the  United  States;  and (viii)  any  partnership  or
corporation  if: (A)  organized  or  incorporated  under the laws of any foreign
jurisdiction;  and (B) formed by a U.S.  person  principally  for the purpose of
investing in securities not registered  under the Securities  Act,  unless it is
organized or  incorporated,  and owned,  by accredited  investors (as defined in
Rule 501(a) under the Securities  Act) who are not natural  persons,  estates or
trusts.

     11.9 Compliance With Laws And Regulations. The issuance and transfer of the
Cellegy Common Stock will be subject to and conditioned upon compliance by Vaxis
and  Stockholder  with all  applicable  U.S.,  Canadian,  provincial,  state and
federal laws and regulations  and with all applicable  requirements of any stock
exchange or automated  quotation  system on which Cellegy's  Common Stock may be
listed or quoted at the time of such issuance or transfer.

ARTICLE XII
GENERAL PROVISIONS

     12.1  Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of which shall be deemed to be an original  but all of which
shall constitute one and the same agreement.

     12.2 Brokers.

         (a) Vaxis represents and warrants to Cellegy that no broker,  finder or
financial  advisor  is  entitled  to any  brokerage,  finder's  or other  fee or
commission in connection with the Transaction or the  transactions  contemplated
by this Agreement based upon arrangements made by or on behalf of Vaxis.

         (b) Cellegy represents and warrants to Vaxis that no broker,  finder or
financial  advisor  is  entitled  to any  brokerage,  finder's  or other  fee or
commission in connection with the Transaction or the  transactions  contemplated
by this Agreement based upon arrangements made by or on behalf of Cellegy.

     12.3  Notices.  All  notices,  Claims,  demands  and  other  communications
hereunder  shall be in  writing  and  shall be deemed  given  upon  delivery  if
delivered in person,  one Business Day after  transmission  by  telecopier  with
confirmation  of receipt,  one business after deposit with a reputable  national
overnight courier for overnight  delivery,  or three Business Days after deposit
in the mail,  certified  mail with return receipt  requested,  to the respective
parties at the  following  addresses  (or at such other  address  for a party as
shall be specified by like notice):

                                      -59-
<PAGE>

               (a)  If to Cellegy, to:

                    Cellegy Pharmaceuticals, Inc.
                    349 Oyster Pt. Boulevard, Suite 200
                    South San Francisco, CA 94080
                    Facsimile: (650) 616-2222
                    Attention: Chief Executive Officer

                    with a copy to:

                    Fenwick & West LLP
                    815 Connecticut Avenue NW, Suite 200
                    Washington, DC 20006
                    Facsimile: (650) 494-1417
                    Attn: Kevin Kelso Esq.

               (b)  if to Vaxis, to:

                    Vaxis Therapeutics Corporation
                    116 Barrie Street, Suite 1606
                    Kingston, Ontario, Canada  K7L 3N6
                    Facsimile: (613) 545-6853
                    Attention: James D. Banting

                    with a copy to:

                    Blake, Cassels & Graydon LLP
                    20th Floor, 45 O'Connor Street
                    Ottawa, Ontario, Canada  K1P 1A4
                    Facsimile: (613) 788-2247
                    Attention: Eric Elvidge

               (c)  if to a  Stockholder,  to the address  for such  Stockholder
                    that is set forth on Exhibit 3.1(a).

     12.4  Interpretation.  The  headings  contained in this  Agreement  are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.  When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement  unless  otherwise  indicated.  The words  "include,"  "includes"  and
"including"  when used herein shall be deemed in each case to be followed by the
words "without  limitation." The phrase "made available" in this Agreement shall
mean that the  information  referred to has been made  available if requested by
the party to whom such  information  is to be made  available.  The parties have
participated  jointly in the negotiation and drafting of this Agreement.  In the
event an  ambiguity  or  question  of  intent  or  interpretation  arises,  this
Agreement  shall be  construed  as if  drafted  jointly  by the  parties  and no
presumption

                                      -60-
<PAGE>

or burden of proof shall arise  favoring or  disfavoring  any party by virtue of
the authorship of any of the provisions of this Agreement.  Any reference to any
federal,  state,  provincial,  local,  or foreign statute or law shall be deemed
also to refer to all rules and regulations  promulgated  thereunder,  unless the
context requires  otherwise.  Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a  representation  or warranty  made herein
unless the Disclosure  Schedule  identifies the exception with particularity and
describes  the  relevant  facts  in  reasonable  detail.  Without  limiting  the
generality  of the  foregoing,  the mere  listing (or  inclusion of a copy) of a
document or other item shall not be deemed  adequate to disclose an exception to
a representation or warranty made herein (unless the  representation or warranty
has to do with the existence of the document or other item itself).  The parties
intend that each representation,  warranty,  and covenant contained herein shall
have  independent  significance.  If any party has breached any  representation,
warranty,  or  covenant  contained  herein in any  respect,  the fact that there
exists  another  representation,  warranty,  or  covenant  relating  to the same
subject matter  (regardless  of the relative  levels of  specificity)  which the
party has not  breached  shall not detract  from or  mitigate  the fact that the
party is in breach of the first representation, warranty, or covenant.

     12.5 Entire Agreement;  Assignment.  This Agreement including the Exhibits,
and other  documents  and  instruments  referred to herein (a)  constitutes  the
entire agreement and supersedes all other prior  agreements and  understandings,
both  written and oral,  among the parties or any of them,  with  respect to the
subject matter  hereof;  (b) is not intended to confer upon any other person any
rights or remedies hereunder;  and (c) shall not be assigned by operation of law
or  otherwise,  provided  that  Cellegy  may assign  its rights and  obligations
hereunder to a direct or indirect  subsidiary of Cellegy or to another entity in
connection  with  the  acquisition  of all  or  substantially  all of  Cellegy's
business  (whether  by  merger,  sale  of  assets  or  otherwise),  but no  such
assignment  shall  relieve  Cellegy,  as the  case  may be,  of its  obligations
hereunder.  This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns.

     12.6  Governing  Law;  Consent to  Jurisdiction.  This  Agreement  shall be
governed by and construed in  accordance  with the laws of the State of Delaware
without  giving effect to the provisions  thereof  relating to conflicts of law.
Each of the  parties  submits  to the  exclusive  jurisdiction  of any  state or
federal court sitting in Delaware, in any action or proceeding arising out of or
relating to this  Agreement  and agrees that all Claims in respect of the action
or proceeding may be heard and determined in any such court. Each of the parties
waives any defense of  inconvenient  forum to the  maintenance  of any action or
proceeding so brought and waives any bond,  surety, or other security that might
be required  of any other party with  respect  thereto.  Each party  agrees that
service of process  in any such  action may be made upon the other  party in the
manner  provided  herein for  delivery  of  notices.  Nothing  in this  Section,
however, shall affect the right of any party to serve legal process in any other
manner permitted by law or in equity. Each party agrees that a final judgment in
any action or proceeding  so brought shall be conclusive  and may be enforced by
suit on the judgment or in any other manner provided by law or in equity.

                                      -61-
<PAGE>

     12.7 Validity.  The invalidity or unenforceability of any provision of this
Agreement  shall  not  affect  the  validity  or  enforceability  of  any  other
provisions of this Agreement, which shall remain in full force and effect.

     12.8  Severability.  The provisions of this Agreement are severable and the
invalidity of any provision will not affect the validity of any other provision.

     12.9 Signatures of Escrow Agent and Representative. By their execution of a
counterpart signature page to this Agreement, each of the Representative and the
Escrow  Agent accept and agree to be bound by the  provisions  of Articles X and
XII of this Agreement, for the benefit of the other parties hereto.

                [Remainder of this page intentionally left blank]

                                      -62-
<PAGE>

IN WITNESS WHEREOF, each of Cellegy,  Vaxis and each Stockholder has caused this
Agreement  to  be  executed  on  its  behalf  by  its  officers  thereunto  duly
authorized, all as of the date first above written.

                                     VAXIS THERAPEUTICS CORPORATION

                                     By:___________________________
                                     Name:
                                     Title:

                                     CELLEGY PHARMACEUTICALS, INC.

                                     By:_________________________________
                                     Name:
                                     Title:

                                     STOCKHOLDER

                                     By:_________________________________

                                     Its: _______________________________

                                     Address: ___________________________
                                              ___________________________
                                              ___________________________

                                     Stockholder  [check one]  is_______  is not
                                     _______ an  accredited  investor as defined
                                     in Regulation D (see Section 11.6(a) above)

ESCROW AGENT                         REPRESENTATIVE

By:_____________________________     ___________________________________
Name:
Title:

                                      -63-
<PAGE>

                                 Exhibit 3.1(b)

                                 Exhibit 3.1 (b)

Vaxis Products

1.   The use of an  endothelin  receptor  antagonist  in the treatment of sexual
     dysfunction. (e.g. erectile dysfunction).

2.   The use of an nitric  oxide  mimetic (as  defined in the Vaxis  Patents) to
     offset the hyperalgesia associated with prostaglandin administration in the
     treatment of sexual dysfunction.

3.   The use of a nitric  oxide  mimetic  in the  treatment  of male and  female
     sexual dysfunction.

4.   The use of a nitric oxide mimetic in the treatment of Raynaud's disease.

5.   The  use of a  nitric  oxide  mimetic  in the  treatment  of  cancer  (e.g.
     prostate).

6.   The use of a nitric  oxide  mimetic to offset  drug  resistance  related to
     chemotherapy in the treatment of cancer (e.g. Drug resistance to 5-FU).

7.   The use of a nitric  oxide  mimetic in the  treatment  of  temporary  sleep
     disturbances (e.g. Restless Leg's Syndrome or insomnia).

Vaxis Patents

Please see attached list.

                                      -64-<PAGE>

                                  $130,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                            Dated as of March 6, 2002

                                      Among

                              CHIQUITA BRANDS, INC.

                                  as Borrower,

                               EACH OF THE LENDERS
                          INITIALLY A SIGNATORY HERETO,
                          TOGETHER WITH THOSE ASSIGNEES
                        PURSUANT TO SECTION 14.6 HEREOF,

                                   as Lenders,

                                       and

                     WELLS FARGO BANK, NATIONAL ASSOCIATION

                     as Lead Arranger and Syndication Agent

                                       and

                          FOOTHILL CAPITAL CORPORATION,

                             as Administrative Agent
<PAGE>

                                TABLE OF CONTENTS
                                                                            Page

ARTICLE I. DEFINITIONS....................................................    1

         1.1      General Definitions.....................................    1
         1.2      Accounting Terms and Determinations.....................   32
         1.3      Other Definitional Terms................................   32

ARTICLE II. LOANS.........................................................   33

         2.1      Revolving Loans.........................................   33
         2.2      Term Loans..............................................   38
         2.3      Optional and Mandatory Prepayments......................   39
         2.4      Payments and Computations...............................   41
         2.5      Maintenance of Account; Register........................   42
         2.6      Statement of Account....................................   43
         2.7      Taxes...................................................   43
         2.8      Sharing of Payments.....................................   45
         2.9      Pro Rata Treatment......................................   45
         2.10     Securitization..........................................   45

ARTICLE III. LETTERS OF CREDIT............................................   46

         3.1      Issuance................................................   46
         3.2      Notice and Reports......................................   47
         3.3      Participation...........................................   47
         3.4      Payment.................................................   47
         3.5      Repayment with Revolving Loans..........................   48
         3.6      Renewal, Extension......................................   49
         3.7      Uniform Customs and Practices...........................   49
         3.8      Indemnification; Nature of Issuing Bank's Duties........   49
         3.9      Responsibility of Issuing Bank..........................   50
         3.10     Conflict with Letter of Credit Documents................   51

ARTICLE IV. INTEREST AND FEES.............................................   51

         4.1      Interest on Loans.......................................   51
         4.2      Interest After Event of Default.........................   51
         4.3      [Intentionally Deleted].................................   51
         4.4      Agent's Fees............................................   51
         4.5      Letter of Credit Fees...................................   52
         4.6      Authorization to Charge Loan Account....................   52
         4.7      Indemnification in Certain Events.......................   52
         4.8      LIBOR Option............................................   53

                                        i
<PAGE>

ARTICLE V. CONDITIONS PRECEDENT...........................................    55

         5.1      Original Closing Date Conditions........................    55
         5.2      Closing Conditions......................................    61
         5.3      Conditions to all Loans and Letters of Credit...........    62

ARTICLE VI. REPRESENTATIONS AND WARRANTIES................................    63

         6.1      Organization and Qualification..........................    63
         6.2      Solvency................................................    63
         6.3      Liens; Inventory........................................    64
         6.4      No Conflict.............................................    64
         6.5      Enforceability..........................................    64
         6.6      Financial Data..........................................    65
         6.7      Locations of Offices, Records and Inventory.............    65
         6.8      Fictitious Business Names...............................    66
         6.9      Subsidiaries............................................    66
         6.10     No Judgments or Litigation..............................    66
         6.11     No Defaults.............................................    66
         6.12     No Employee Disputes....................................    66
         6.13     Compliance with Law.....................................    67
         6.14     PACA....................................................    67
         6.15     ERISA...................................................    67
         6.16     Compliance with Environmental Laws......................    68
         6.17     Use of Proceeds.........................................    68
         6.18     Intellectual Property...................................    69
         6.19     Licenses and Permits....................................    70
         6.20     Title to Property.......................................    70
         6.21     Labor Matters...........................................    70
         6.22     Investment Company......................................    70
         6.23     Margin Security.........................................    71
         6.24     No Event of Default.....................................    71
         6.25     Taxes and Tax Returns...................................    71
         6.26     Indebtedness; CBII Obligations..........................    71
         6.27     Status of Accounts......................................    71
         6.28     Representations and Warranties..........................    72
         6.29     Material Contracts......................................    72
         6.30     Survival of Representations.............................    72
         6.31     Affiliate Transactions..................................    72
         6.32     Insurance...............................................    72
         6.33     Accuracy and Completeness of Information................    72

ARTICLE VII. AFFIRMATIVE COVENANTS........................................    73

         7.1      Information.............................................    73
         7.2      [Intentionally Deleted].................................    76
         7.3      Corporate Existence.....................................    76

                                       ii
<PAGE>

         7.4      ERISA...................................................    76
         7.5      Proceedings or Adverse Changes..........................    78
         7.6      Environmental Matters...................................    79
         7.7      Books and Records; Inspection...........................    79
         7.8      Collateral Records......................................    80
         7.9      Security Interests......................................    80
         7.10     Insurance; Asset Loss...................................    81
         7.11     Taxes...................................................    82
         7.12     Compliance With Laws....................................    83
         7.13     Use of Proceeds.........................................    83
         7.14     Fiscal Year.............................................    83
         7.15     Notification of Certain Events..........................    83
         7.16     Additional Subsidiaries; Inactive Subsidiaries..........    84
         7.17     Schedules of Accounts and Purchase Orders...............    84
         7.18     Collection of Accounts..................................    84
         7.19     Notice; Credit Memoranda; and Returned Goods............    85
         7.20     Acknowledgment Agreements...............................    85
         7.21     Trademarks etc..........................................    86
         7.22     Maintenance of Property.................................    86
         7.23     [Intentionally Deleted].................................    86
         7.24     Revisions or Updates to Schedules.......................    86
         7.25     [Intentionally Deleted].................................    86
         7.26     Compliance with PACA....................................    86
         7.27     Covenants Relating to Food Security Act.................    87
         7.28     Payment for Perishable Goods............................    87

ARTICLE VIII. FINANCIAL COVENANTS.........................................    88

         8.1      Leverage Ratio..........................................    88
         8.2      Fixed Charge Coverage Ratio.............................    88
         8.3      Capital Expenditures....................................    88
         8.4      EBITDA..................................................    89
         8.5      Chiquita Fresh Latin American Group.....................    89

ARTICLE IX. NEGATIVE COVENANTS............................................    89

         9.1      Restrictions on Liens...................................    89
         9.2      Restrictions on Indebtedness............................    89
         9.3      Restrictions on Transfer of Assets......................    90
         9.4      No Corporate Changes....................................    92
         9.5      No Guarantees...........................................    93
         9.6      No Restricted Payments..................................    93
         9.7      No Investments..........................................    94
         9.8      No Affiliate Transactions...............................    94
         9.9      No Prohibited Transactions Under ERISA..................    94
         9.10     No Additional Bank Accounts.............................    95
         9.11     Amendments of Material Contracts........................    95

                                       iii
<PAGE>

         9.12     Additional Negative Pledges.............................    96
         9.13     Sale and Leaseback......................................    96
         9.14     Licenses, Etc...........................................    97
         9.15     Limitations.............................................    97
         9.16     Transfer Pricing........................................    97
         9.17     Sales...................................................    97
         9.18     Excluded Entities.......................................    98
         9.19     Hedging and Interest Rate Protection....................    98
         9.20     Payments on Certain Intercompany Obligations............    98

ARTICLE X. POWERS.........................................................    98

         10.1     Appointment as Attorney-in-Fact.........................    98
         10.2     Limitation on Exercise of Power.........................    99

ARTICLE XI. EVENTS OF DEFAULT AND REMEDIES................................    99

         11.1     Events of Default.......................................    99
         11.2     Acceleration............................................   101

ARTICLE XII. TERMINATION..................................................   102

ARTICLE XIII. THE AGENT...................................................   102

         13.1     Appointment of Agent....................................   102
         13.2     Nature of Duties of Agent...............................   102
         13.3     Lack of Reliance on Agent...............................   103
         13.4     Certain Rights of the Agent.............................   103
         13.5     Reliance by Agent.......................................   103
         13.6     Indemnification of Agent................................   104
         13.7     The Agent in its Individual Capacity....................   104
         13.8     Holders of Notes........................................   104
         13.9     Successor Agent.........................................   104
         13.10    Collateral Matters......................................   105
         13.11    Actions with Respect to Defaults........................   107
         13.12    Delivery of Information.................................   107
         13.13    Wells Fargo as Lead Arranger and Syndication Agent......   107

ARTICLE XIV. MISCELLANEOUS................................................   107

         14.1     Waivers.................................................   107
         14.2     JURY TRIAL..............................................   107
         14.3     GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE........   108
         14.4     [Intentionally Deleted].................................   108
         14.5     Notices.................................................   108
         14.6     Assignability...........................................   109
         14.7     Information.............................................   112

                                       iv
<PAGE>

         14.8     Payment of Expenses; Indemnification....................   113
         14.9     Entire Agreement, Successors and Assigns................   114
         14.10    Amendments, Etc.........................................   114
         14.11    Nonliability of Agent and Lenders.......................   115
         14.12    Independent Nature of Lenders' Rights...................   115
         14.13    Counterparts............................................   115
         14.14    Effectiveness...........................................   115
         14.15    Severability............................................   115
         14.16    Headings Descriptive....................................   116
         14.17    Maximum Rate............................................   116
         14.18    Right of Setoff.........................................   116
         14.19    Power of Attorney.......................................   117
         14.20    Restatement of Original Credit Agreement................   117

                                        v
<PAGE>

                             EXHIBITS AND SCHEDULES
                             ----------------------

                                    EXHIBITS

Exhibit A                  Form of Acknowledgment Agreement
Exhibit B                  Form of Assignment and Acceptance
Exhibit C-1                Form of Revolving Note
Exhibit C-2                Form of Term Loan Note
Exhibit D                  Form of Notice of Borrowing
Exhibit D-1                Form of LIBOR Notice
Exhibit E-1                Form of Lockbox Agreement
Exhibit E-2                Form of Lockbox Letter
Exhibit F                  Form of Compliance Certificate
Exhibit F-1                Form of Monthly Compliance Certificate
Exhibit G                  Form of Revolving Credit Borrowing Base Certificate
Exhibit H                  Form of Solvency Certificate
Exhibit I                  Form of Account Designation Letter
Exhibit J                  Form of Joinder Agreement
Exhibit K                  Closing Checklist

                                    SCHEDULES

Schedule 1.1A              Lenders and Commitments
Schedule 1.1B              Existing Letters of Credit
Schedule 1.1C              Liens
Schedule 1.1D              Indebtedness
Schedule 1.1E              Investments
Schedule 3.1               Issuance of Letters of Credit
Schedule 6.1               Jurisdictions of Organization
Schedule 6.7               Collateral Locations
Schedule 6.8               Fictitious Business Names
Schedule 6.9               Borrower and Subsidiaries
Schedule 6.10              Litigation
Schedule 6.15              ERISA
Schedule 6.16              Environmental Disclosures
Schedule 6.18              Intellectual Property
Schedule 6.26              CBII Obligations
Schedule 6.29              Material Contracts
Schedule 6.31              Affiliate Transactions
Schedule 6.32              Insurance
Schedule 9.3               Permitted Asset Sales
Schedule 9.3A              Additional Permitted Investments
Schedule 9.6               Tax Sharing Arrangements
Schedule 9.10              Bank Accounts
Schedule 9.12              Negative Pledges

                                       vi
<PAGE>

                                                                    Exhibit 10.1

                      AMENDED AND RESTATED CREDIT AGREEMENT

          THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of March
6, 2002 among CHIQUITA BRANDS, INC., a Delaware corporation (the "Borrower"),
each of the lenders identified as Lenders on Schedule 1.1A hereto (together with
                                             -------------
each of their successors and assigns, referred to individually as a "Lender"
and, collectively, as the "Lenders"), WELLS FARGO BANK, NATIONAL ASSOCIATION
("Wells Fargo"), acting as lead arranger and syndication agent, and FOOTHILL
CAPITAL CORPORATION ("Foothill"), acting administrative agent in the manner and
to the extent described in Article XIII hereof (in such capacity, the "Agent").
                           ------------

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

          WHEREAS, the Borrower, the Lenders (as defined therein) and the Agent
entered into that certain Credit Agreement dated as of March 7, 2001 (as amended
or otherwise modified to date, the "Original Credit Agreement") whereby (i) the
Lenders made a term loan facility to the Borrower in the aggregate principal
amount of $75,000,000 maturing on March 7, 2004 and (ii) the Lenders provided a
revolving credit facility (including letter of credit subfacility) to the
Borrower in an aggregate principal amount not to exceed $120,000,000 at any time
outstanding and maturing on March 7, 2004;

          WHEREAS, the Borrower desires that the Lenders increase the principal
amount of credit available to the Borrower under the Original Credit Agreement
to One Hundred Thirty Million Dollars ($130,000,000) and adjust the principal
amount of the term loans under the Original Credit Agreement to Seventy Million
Dollars ($70,000,000), and the Lenders are willing to provide Borrower with
Loans in such amounts upon the terms and conditions set forth herein;

          WHEREAS, the Borrower and each Secured Credit Party desire to secure
all of the obligations under the Credit Documents by continuing the prior grant
of a security interest in and lien upon all of Borrower's and each Secured
Credit Party's existing and after-acquired personal property to Agent, for the
benefit of Agent and the Lenders; and

          WHEREAS, the Borrower, the Lenders and the Agent now desire to amend
and restate the Original Credit Agreement to, among other things, accomplish the
matters set forth above and to permit Wells Fargo to join this Amended and
Restated Credit Agreement, in each case, on the terms and subject to the
conditions set forth herein;

          NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree
as follows:

                                   ARTICLE I.

                                   DEFINITIONS

   1.1    General Definitions.
          --------------------

          As used herein, the following terms shall have the meanings herein
specified:
<PAGE>

          "Ableco" shall mean Ableco Finance LLC.

          "Accounts" shall mean all of the Borrower's "accounts" (as defined in
the Code), whether now existing or existing in the future, including, without
limitation, all (i) accounts receivable (whether or not specifically listed on
schedules furnished to the Agent), including, without limitation, all accounts
created by or arising from all of the Borrower's sales of goods or rendition of
services made under any of the Borrower's trade names or styles, or through any
of the Borrower's divisions; (ii) unpaid seller's rights (including rescission,
replevin, reclamation and stopping in transit) relating to the foregoing or
arising therefrom, (iii) rights to any goods represented by any of the
foregoing, including returned or repossessed goods; (iv) reserves and credit
balances held by the Borrower with respect to any such accounts receivable or
account debtors; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.

          "Acknowledgement Agreements" shall mean the Acknowledgment Agreements,
substantially in the form of Exhibit A hereto, between the Borrower's
                             ---------
warehousemen, fillers, packers and processors and the Agent, in each case
acknowledging and agreeing, among other things, (A) that such warehousemen,
fillers, packers and processors do not have any Liens on any of the property of
the Borrower or any Subsidiary and (B) to the collateral assignment by the
Borrower to the Agent of its interest in the contracts with each of such
warehousemen, fillers, packers and processors.

          "Acquired Company" shall mean the Person (or the assets or business
thereof) which is acquired pursuant to an Acquisition.

          "Acquisition" shall mean (i) the purchase of the Capital Stock of a
Person, (ii) the purchase of all or a substantial portion of the assets or
business of any Person or (iii) the merger or consolidation with a Person in
which the Borrower or a Subsidiary shall be the surviving or resulting
corporation.

          "Acquisition Documents" shall mean any agreement pursuant to which an
Acquisition is made in accordance with the terms hereof, including the exhibits
and schedules thereto, and all agreements, documents and instruments executed
and delivered pursuant thereto or in connection therewith.

          "Affiliate" shall mean any entity which directly or indirectly
controls, is controlled by, or is under common control with, the Borrower or any
Subsidiary of the Borrower. For purposes of this definition, "control" shall
mean the possession, directly or indirectly, of the power to (i) vote ten
percent (10%) or more of the securities having ordinary voting power for the
election of directors of such Person, or (ii) direct or cause the direction of
management and policies of a business, whether through the ownership of voting
securities, by contract or otherwise and either alone or in conjunction with
others or any group.

          "Agent" shall mean Foothill as Agent under the Original Credit
Agreement and as provided in the preamble to this Credit Agreement or any
successor to Foothill.

          "Agent Bank Account" shall have the meaning set forth in Section
                                                                   -------
7.18(a).
-------

                                       2
<PAGE>

          "Agent's Fees" shall mean the fees payable by the Borrower to the
Agent as described in the Fee Letter.

          "Aggregate Commitment" means the sum of the Commitments.

          "Allocated CBII Overhead" shall mean the following overhead and
disbursements of CBII, but only to the extent that they are allocated to the
Borrower or any of its consolidated Subsidiaries: salaries, pension and benefit
expenses, taxes (other than taxes on income or revenue), insurance costs, legal
expenses, communication and maintenance fees, travel expenses, outside
accounting fees, headquarter office expenses, deferred compensation and
non-contractual severance expenses, but excluding Permitted Restructuring
Expenses, and principal, interest and other fees related to any Indebtedness.

          "Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to one-tenth of one percent (.1%) of the Maximum
Credit Line as of the Closing Date for each full or partial month remaining from
the date of payment until the Maturity Date. In the event of an early
termination of this Credit Agreement and a prepayment in full of all of the
Obligations from a Qualified Refinancing, the amount of the Applicable
Prepayment Premium determined hereunder shall be reduced by a percentage equal
to the amount of the Commitment which is held by those Lenders that participate
in the Qualified Refinancing divided by the total of all the Commitments and the
amount of such Applicable Prepayment Premium (as so reduced) shall be allocated
to the Lenders not participating in such replacement credit facility.

          "Appraisal" shall mean (i) that certain Trademarks and Tradenames
Valuation dated December 5, 2000 performed by Daley-Hodkin Appraisal Corporation
relating to Chiquita Brands International, Inc., a copy of which was delivered
to the Lenders on or prior to January 26, 2001 or (ii) after the receipt by the
Lenders of a new or updated valuation appraisal, such new or updated appraisal.

          "Asset Disposition" shall mean the disposition (other than (i) a
disposition described in clauses (a), (b), (c), (g) or (i) of Section 9.3, (ii)
                                                              -----------
a disposition described in clause (d) of Section 9.3, to the extent that any
                                         -----------
Asset Sale Block put in place or any cash proceeds held by the Agent, in either
case in connection therewith pursuant to Section 9.3 hereof, are released by the
                                         -----------
Agent as provided in Section 9.3 within one hundred and twenty (120) days of
                     -----------
such disposition, (iii) Specified Asset Dispositions, (iv) the sales of one or
more Tropical Farms (and equity interests in Persons which own only Tropical
Farms) to the extent that any Farm Sale Block put in place or any cash proceeds
held by the Agent, in either case in connection therewith pursuant to Section
                                                                      -------
9.3, are released by the Agent as provided in Section 9.3 within one hundred and
---                                           -----------
twenty (120) days of such sale and (v) any disposition of intellectual property
rights pursuant to the Trademark License Agreement) of any or all of the assets
(including, without limitation, the Capital Stock of the Borrower or its
Subsidiaries) of the Borrower or its Subsidiaries, whether by sale, lease,
transfer or otherwise, in a single transaction, or in a series of related
transactions in any consecutive twelve (12) month period beginning on or after
the Original Closing Date (a) that have a fair market value in the aggregate in
excess of $1,000,000 or (b) for Net Cash Proceeds in the aggregate in excess of
$1,000,000.

                                       3
<PAGE>

          "Asset Loss" shall have the meaning given to such term in Section 7.10
                                                                    ------------

          "Asset Sale Block" shall have the meaning set forth in Section 9.3.
                                                                 ------------

          "Assignment and Acceptance" shall mean an assignment and acceptance
entered into by an assigning Lender and an assignee Lender, accepted by the
Agent, in accordance with Section 14.6(f), in the form attached hereto as
                          ---------------
Exhibit B.
----------

          "Availability" shall mean an amount equal to the excess of (i) the
Revolving Credit Borrowing Base over (ii) the sum of (a) the outstanding amount
of Revolving Loans and Letter of Credit Obligations plus (b) the aggregate
amount, if any, of all trade payables of the Borrower and the other Credit
Parties aged in excess of historical levels with respect thereto and all book
overdrafts in excess of historical practices with respect thereto, in each case
as determined in good faith by the Agent.

          "Back-to-Back Loan" shall mean a loan made to a Subsidiary by a
financial institution in which the Borrower or another Subsidiary (other than an
Excluded Entity) owns a one hundred percent (100%) participation interest.

          "Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), based on the rates at which Dollar deposits are offered to
major banks in the London interbank market on or about 11:00 a.m. (California
time) two (2) Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Borrower in accordance with this Credit
Agreement, which determination shall be conclusive in the absence of manifest
error.

          "Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.

          "Borrower" shall have the meaning given to such term in the preamble
of this Credit Agreement.

          "Borrower Entities" shall mean the Borrower, each Guarantor and each
Subsidiary which is party to one or more Credit Documents.

          "Business Day" shall mean any day other than a Saturday, a Sunday, a
legal holiday or a day on which national banks are authorized or required by law
or other governmental action to close, except that, if a determination of a
Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also
shall exclude any day on which banks are closed for dealings in Dollar deposits
in the London interbank market.

          "Capital Expenditures" shall mean expenditures for the acquisition
(including the acquisition by capitalized lease) or improvement of capital
assets, as determined in accordance with GAAP.

                                       4
<PAGE>

          "Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.

          "Capital Stock" shall mean (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other equity interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.

          "Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one (1) year from the date of acquisition, (ii) time deposits or certificates of
deposit of any commercial bank incorporated under the laws of the United States
or any state thereof, of recognized standing having capital and unimpaired
surplus in excess of $1,000,000,000 and whose short-term commercial paper rating
at the time of acquisition is at least A-1 or the equivalent thereof by Standard
& Poor's Corporation or at least P-1 or the equivalent thereof by Moody's
Investors Services, Inc. (any such bank, an "Approved Bank"), with such deposits
or certificates having maturities of not more than one (1) year from the date of
acquisition, (iii) repurchase obligations with a term of not more than seven (7)
days for underlying securities of the types described in clauses (i) and (ii)
above entered into with any Approved Bank, (iv) commercial paper or finance
company paper issued by any Person incorporated under the laws of the United
States or any state thereof and rated at least A-1 or the equivalent thereof by
Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., and in each case maturing not more than one
year after the date of acquisition, and (v) investments in money market funds
that are registered under the Investment Company Act of 1940, as amended, which
have net assets of at least $1,000,000,000 and at least eighty-five percent
(85%) of whose assets consist of securities and other obligations of the type
described in clauses (i) through (iv) above. All such Cash Equivalents must be
denominated solely for payment in Dollars.

          "CBCNA" shall mean Chiquita Brands Company, North America, a Delaware
corporation.

          "CBII" shall mean Chiquita Brands International, Inc., a New Jersey
corporation.

          "CBII Reorganization Consummation" shall have the meaning given to
such term in Section 9.6.
             ------------

          "Change of Control" shall mean the occurrence of any of the following:
(i) any Person or group of Persons acting collectively, owns more than thirty
percent (30%) of the equity shares of CBII entitled to vote for the election of
the Board of Directors of CBII (the "Voting Shares"), (ii) at any time a
majority of CBII's directors then in office consists of individuals who meet
none of the following criteria: (A) such individuals are members of CBII's board
of

                                       5
<PAGE>

directors seated in connection with the CBII Reorganization Consummation; (B)
such individuals were members of CBII's board of directors as of the date twelve
months earlier than the date of determination; (C) such individuals are CBII
directors appointed to replace any CBII directors who died, became disabled, or
voluntarily resigned; (D) such individuals are CBII directors who were approved
by a vote of a majority of CBII directors who meet any of the criteria in (A),
(B), (C), or (E) or who were previously appointed or elected in accordance with
(D) or (E); or (E) such individuals are CBII directors whose nomination for
election by CBII shareholders was approved by a vote of a majority of CBII
directors who meet any of the criteria in (A), (B), (C), or (D) or who were
previously appointed or elected in accordance with (D) or (E), (iii) CBII ceases
to own, directly or indirectly, one hundred percent (100%) of the issued and
outstanding Capital Stock of the Borrower, or (iv) the Borrower ceases to own
directly or indirectly one hundred percent (100%) of the issued and outstanding
Capital Stock of any Secured Credit Party (other than the Borrower) or Chiquita
Banana Company B.V., a Netherlands company.

          "Chiquita Fresh Latin American Group" shall mean the following Persons
and their Subsidiaries:

          -    Blue Fish Holdings Establishment/CILPAC Establishment and their
               Subsidiaries (excluding Heaton Holdings, Ltd. and its
               Subsidiaries)
          -    Valk Deelnemingen Establishment, Zwaan Deelnemingen
               Establishment, Buizerd Deelnemingen Establishment, Mus
               Deelnemingen Establishment, Kaketoe Deelnemingen Establishment,
               Struisvogel Deelnemingen Establishment, SZS Sargasso Zeeblelangen
               B.V. Establishment, Occidentalis Atlantis Establishment,
               Zonnekoning Overzee B.V. Establishment and their Subsidiaries
          -    Conexpro Inc. Establishment and its Subsidiaries
          -    Antioquia Establishment/Bijzondere Benedenwindse Beleggingen
               Establishment/Uraba Establishment/Tairona Establishment/Quindio
               Establishment and their Subsidiaries
          -    Banacorp, S.A./Compania Bananera Guatemalteca Independiente, S.A.
               and their Subsidiaries
          -    Catellia Ltd./Tropical Traders Ltd./Compania
          -    Agricola San Nicolas, S.A. and their Subsidiaries
          -    Financiera Agro-Exportaciones Limitada
          -    Financiera Estrella Limited
          -    Financiera Agricola Limited
          -    Chiquita International Services Group N.V./Banexpro
               Ltd./Brundicorpi S.A. and their Subsidiaries
          -    Compania Mundimar, S.A.
          -    Bello Puerto S.A.
          -    Rimsa Inc. S.A.
          -    Compania La Cruz, S.A.

                                       6
<PAGE>

          "Chiquita Fresh European Group" shall mean the following Persons and
their Subsidiaries:

          -    Chiquita Banana Company, B.V.
          -    Chiquita Ceroz, s.r.o.
          -    Chiquita Compagnie des Bananes
          -    Chiquita CR, S.r.o.
          -    Chiquita Far East Holdings B.V.
          -    Chiquita Finland Oy
          -    Chiquita Fresh B.V.B.A.
          -    Chiquita Frupac B.V.
          -    Chiquita International Services Group N.V.
          -    Chiquita Italia, S.p.A.
          -    Chiquita Packaged Goods Distributing S.r.l.
          -    Chiquita Tropical Fruit Company B.V.
          -    B.V. v/h Bruigom en Visser
          -    Banafruta-Comercio de Bananas, LDA
          -    E.C. van Eeuwijk Banaanen B.V.
          -    International Banana Ripening Company N.V.
          -    Processed Fruit Ingredients B.V.
          -    Spiers N.V.
          -    Ter Wal Bananen B.V.

          "CIL" shall mean Chiquita International Limited, a Bermuda company.

          "Citrus" shall mean Chiquita Gulf Citrus, Inc., a Delaware
corporation.

          "Closing" shall mean the date on which the conditions set forth in
Section 5.2 of this Credit Agreement have been satisfied or waived.

          "Closing Date" shall mean the time at which the Closing occurs, which
time shall occur not later than March 7, 2002.

          "Code" shall have the meaning set forth in Section 1.3.
                                                     ------------

          "Collateral" shall mean any and all assets and rights and interests in
or to property pledged from time to time as security for the Obligations
pursuant to the Security Documents whether now owned or hereafter acquired,
including, without limitation, all of the Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Fixtures, General Intangibles (including all
intellectual property), Inventory, Instruments, Investment Property and Proceeds
(each as defined in the Security Agreements).

          "Commitment" of any Lender means the amount set forth opposite such
Lender's name on Schedule 1.1A hereto, as such amounts may be modified as a
result of an assignment hereunder, or as a result of a reduction pursuant to
Section 2.3.
------------

                                       7
<PAGE>

          "Consolidated" or "consolidated" with reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and all
of its consolidated Subsidiaries, consolidated in accordance with GAAP.

          "Consolidated Capital Expenditures" shall mean, for any applicable
period of computation, an amount equal to the consolidated aggregate
expenditures of the Borrower and its consolidated Subsidiaries (other than CPF
and its Subsidiaries) during such fiscal period for the acquisition (including
the acquisition by capitalized lease) or improvement of capital assets, as
determined in accordance with GAAP.

          "Consolidated Cash Taxes" shall mean, for any applicable period of
computation, the aggregate of all taxes of the Borrower and its consolidated
Subsidiaries (other than CPF and its Subsidiaries) on a consolidated basis
determined in accordance with applicable law and GAAP applied on a consistent
basis, to the extent the same are paid in cash during such period and the
aggregate amount of all tax distributions made in cash as described in Schedule
                                                                       --------
9.6(b) during such period.
-----

          "Consolidated EBITDA" shall mean, for any applicable period of
computation, the sum of (i) Consolidated Net Income for such period, but
excluding therefrom all extraordinary items of income and all extraordinary
non-cash items of loss, plus (ii) the aggregate amount of depreciation and
amortization charges made in calculating Consolidated Net Income for such
period, plus (iii) aggregate Consolidated Interest Expense for such period, plus
(iv) the aggregate amount of all income taxes reflected on the consolidated
statements of income of the Borrower and its Subsidiaries (other than CPF and
its Subsidiaries) for such period plus (v) the amount of all non-cash
adjustments resulting from fresh start accounting to the extent such amounts
were deducted in determining Consolidated Net Income.

          "Consolidated Fixed Charges" shall mean, for any applicable period of
computation, without duplication, the sum of (i) all Consolidated Interest
Expense for the applicable period, plus (ii) Consolidated Scheduled Funded Debt
Payments due during the applicable period, plus (iii) Consolidated Cash Taxes
for the applicable period, plus (iv) Unallocated CBII Overhead for the
applicable period, plus (iv) amounts advanced or distributed by the Borrower or
any Subsidiary to CBII to enable it to pay interest on CBII's Indebtedness.

          "Consolidated Funded Debt" shall mean, as of the date of
determination, all Funded Indebtedness of the Borrower and its consolidated
Subsidiaries (other than CPF and its Subsidiaries), determined on a consolidated
basis in accordance with GAAP.

          "Consolidated Interest Expense" shall mean, for any applicable period
of computation, interest expense, net of interest income, of the Borrower and
its consolidated Subsidiaries (other than CPF and its Subsidiaries) for such
period, as determined in accordance with GAAP.

          "Consolidated Net Income" shall mean, for any applicable period of
computation, the consolidated net income (or net deficit) of the Borrower and
its consolidated Subsidiaries (other than CPF and its Subsidiaries) for such
period, after deduction of all expenses, taxes and other proper charges, all as
determined in accordance with GAAP.

                                       8
<PAGE>

          "Consolidated Scheduled Funded Debt Payments" shall mean, for any
applicable period of computation, the sum of all scheduled payments of principal
on Consolidated Funded Debt for such period (including the principal component
of payments due on Capital Leases or under any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product (but excluding true leases) during the applicable period ending on such
date); it being understood that Consolidated Scheduled Funded Debt Payments
shall not include (i) voluntary prepayments or the mandatory prepayments
required pursuant to Section 2.3; or (ii) the repayment of up to $55,000,000 of
                     -----------
Indebtedness owing on the Original Closing Date by thirteen Costa Rican
Subsidiaries to Fleet National Bank, or (iii) principal payments with respect to
Indebtedness of Indian River so long as such Indebtedness is not GAAP
Indebtedness of the Borrower and its consolidated Subsidiaries.

          "Contractual Obligations" shall mean, with respect to any Person, any
term or provision of any securities issued by such Person, or any indenture,
mortgage, deed of trust, contract, undertaking, document, instrument or other
agreement to which such Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.

          "Controlled ERISA Affiliate" shall mean an ERISA Affiliate owned or
controlled by CBII.

          "Covenant Compliance Agreement" means each agreement pursuant to which
one or more Subsidiaries has, among other things, agreed that it shall not take,
or omit to take any action which would cause the Borrower to be in violation or
breach of this Agreement.

          "CPF" shall mean Chiquita Processed Foods, L.L.C., a Delaware limited
liability company.

          "Credit Agreement" shall mean this amended and restated credit
agreement, dated as of the date hereof, as the same may be modified, amended,
extended, restated or supplemented from time to time.

          "Credit Documents" shall mean, collectively, this Credit Agreement,
the Revolving Notes, the Term Loan Notes, the Letters of Credit, the Security
Documents, the Guarantees, the Covenant Compliance Agreement and all other
documents, agreements, instruments, opinions and certificates executed and
delivered in connection herewith or therewith, as the same may be modified,
amended, extended, restated or supplemented from time to time.

          "Credit Parties" shall mean the Borrower and the Guarantors.

          "CTP" shall mean Chiquita Tropical Products Company, a Delaware
corporation.

          "Default" shall mean an event, condition or default which, with the
giving of notice, the passage of time or both would be an Event of Default.

          "Default Rate" shall have the meaning given to such term in Section
4.2.                                                                  -------
---

                                       9
<PAGE>

          "Defaulting Lender" shall have the meaning given to such term in
Section 2.1(d)(iii).
--------------------

          "DOL" shall mean the U.S. Department of Labor and any successor
department or agency.

          "Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.

          "Eligible Accounts Receivable" shall mean the aggregate face amount of
the Borrower's Accounts that conform to the warranties contained herein, less
the aggregate amount of all customer deposits, returns, discounts, claims,
credits, charges (including warehousemen's charges) and allowances of any nature
(whether issued, owing, granted or outstanding), and less the aggregate amount
of all reserves for slow paying accounts, foreign sales, and bill and hold (or
deferred shipment) transactions. Unless otherwise approved in writing by the
Agent, no Account shall be deemed to be an Eligible Account Receivable if:

          (i) it arises out of a sale made by the Borrower to an Affiliate; or

          (ii) the Account (a) does not require full payment of the amount
thereof within thirty (30) days of the applicable sale or (b) is unpaid more
than ninety (90) days after the original due date; or

          (iii) fifty percent (50%) or more, in face amount, of other Accounts
from such account debtor (or any Affiliate thereof) are due or unpaid more than
ninety (90) days after the original due date; or

          (iv) the amount of the Account, when aggregated with all other
Accounts of such account debtor, exceeds fifteen percent (15%) in face value of
all Accounts of the Borrower then outstanding, to the extent of such excess; or

          (v)(A) the account debtor is also a creditor of the Borrower, to the
extent of the amount owed by the Borrower to the account debtor, (B) the account
debtor has disputed its liability on, or the account debtor has made any claim
with respect to, such Account or any other Account due from such account debtor
to the Borrower, which has not been resolved or (C) the Account otherwise is or
may become subject to any right of setoff by the account debtor, to the extent
of the amount of such setoff; or

          (vi) the Account is owing by an account debtor that has commenced a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of creditors, or if a
decree or order for relief has been entered by a court having jurisdiction in
the premises in respect to such account debtor in an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or if any
other petition or other application for relief under the federal bankruptcy laws
has been filed by or against the account debtor, or if such account debtor has
failed, suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets or affairs; or

                                       10
<PAGE>

          (vii) the sale is to an account debtor outside the continental United
States or Canada, unless the sale is (A) on letter of credit, guaranty or
acceptance terms, or subject to credit insurance, in each case acceptable to the
Agent in its sole discretion, or (B) otherwise approved by and acceptable to the
Agent in its sole discretion; or

          (viii) the sale to the account debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or return; or

          (ix) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the account debtor or its designee or the services
giving rise to such Account have not been performed by or on behalf of the
Borrower and accepted by the account debtor or its designee or the Account
otherwise does not represent a final sale; or

          (x) the Accounts owing by a particular account debtor exceed a credit
limit as to that account debtor determined by the Agent, in its reasonable
discretion, to the extent such Accounts owing by the particular account debtor
exceed such limit; or

          (xi) the Account is subject to a Lien which has priority over the Lien
of the Agent in such Account other than Liens arising from claims under PACA;
provided however, the Agent shall establish a reserve against Eligible Accounts
Receivable to the extent of such PACA claims;

          (xii) the Account was acquired by the Borrower from CBII or any
Affiliate of the Borrower;

          (xiii) the Account did not arise from the sale of bananas or plantains
for which Chiquita Brands Company, North America or Chiquita (Canada) Inc. acted
as the Borrower's sales agent pursuant to a contract approved by the Agent;

          (xiv) the account debtor with respect to such Account is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which Borrower has
complied, to the reasonable satisfaction of Agent, with the Assignment of Claims
Act, 31 USC Section.27), or (ii) any state of the United States (exclusive,
however, of (y) Accounts owed by any state that does not have a statutory
counterpart to the Assignment of Claims Act, or (z) Accounts owed by any state
that does have a statutory counterpart to the Assignment of Claims Act as to
which Borrower has complied to Agent's satisfaction); or

          (xv) the account debtor with respect to such Account is a trucking
company.

          In addition to the foregoing, Eligible Accounts Receivable shall
include such Accounts as the Borrower shall request and that the Agent approves
in advance, in writing and in its reasonable judgment.

          "Equity Issuance" shall mean any issuance by the Borrower or any of
its Subsidiaries to any Person other than to the Borrower or any of its
Subsidiaries or any direct or indirect parent of the Borrower of (a) shares of
its Capital Stock, (b) any shares of its Capital

                                       11
<PAGE>

Stock pursuant to the exercise of options or warrants or (c) any shares of its
Capital Stock pursuant to the conversion of any debt securities to equity. The
term "Equity Issuance" shall not include any Asset Disposition.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.

          "ERISA Affiliate" shall mean any (i) corporation which is or was at
any time a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code) as the Borrower or any
Subsidiary of the Borrower; (ii) partnership or other trade or business (whether
or not incorporated) at any time under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with the Borrower or any Subsidiary
of the Borrower; and (iii) member of the same affiliated service group (within
the meaning of Section 414(m) of the Internal Revenue Code) as the Borrower or
any Subsidiary of the Borrower, any corporation described in clause (i) above,
or any partnership or trade or business described in clause (ii) above.

          "Event(s) of Default" shall have the meaning provided for in Article
XI.                                                                    -------
--

          "Excluded Entities" shall mean CPF and its Subsidiaries, Frupac and
its Subsidiaries, PV and its Subsidiaries, GWF and its Subsidiaries and Citrus.

          "Excluded Taxes" shall have the meaning given to such term in Section
2.7.                                                                    -------
---

          "Existing Letters of Credit" shall mean those letters of credit listed
on Schedule 1.1(b) hereto.
   ------------

          "Farm Sale Block" shall have the meaning set forth in Section 9.3.
                                                                ------------

          "Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.

          "Fee Letter" shall mean the amended and restated letter agreement,
dated as of the date hereof, by and between the Agent and the Borrower regarding
the fees to be paid by the Borrower to the Agent, as amended, restated,
supplemented or otherwise modified from time to time.

          "Fees" shall mean, collectively, the Agent's Fees, the Letter of
Credit Fee and the Issuing Bank Fees payable hereunder.

          "Financials" shall have the meaning given to such term in Section 6.6.
                                                                    ------------

                                       12
<PAGE>

          "Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(i) Consolidated EBITDA for such period to (ii) Consolidated Fixed Charges for
such period.

          "Food Security Act" shall mean the Food Security Act of 1985, as
amended, and any successor statute thereto, including all rules and regulations
thereunder, all as the same may be in effect from time to time.

          "Foothill" has the meaning set forth in the preamble hereto.

          "Foreign Lender" shall have the meaning given to such term in Section
2.7(a).                                                                 -------
-----

          "Frupac" shall mean Chiquita Frupac, Inc., a Delaware corporation.

          "Funded Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.1, (b) all Indebtedness
                                               ------------
of another Person of the type referred to in clause (a) above secured by (or for
which the holder of such Funded Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all guaranties of such Person
with respect to Indebtedness of the type referred to in clause (a) above of
another Person and (d) Indebtedness of the type referred to in clause (a) above
of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with respect
thereto.

          "Funding Bank" shall have the meaning given to such term in Section
4.7.                                                                  -------
---

          "GAAP" shall mean generally accepted accounting principles in the
United States of America, in effect from time to time.

          "GAAP Indebtedness" shall mean debt for borrowed money which is or is
required to be reflected as a liability on the balance sheet of the respective
obligor in accordance with GAAP.

          "Governmental Authority" shall mean any federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.

          "Guarantees" shall mean that certain Guarantee dated as of the
Original Closing Date made by certain of the Guarantors in favor of the Agent
(for itself and the Lenders) and each other agreement pursuant to which any
Person unconditionally guarantees the Obligations.

          "Guarantors" shall mean those Persons listed on Schedule 6.9 hereto as
                                                          ------------
a Guarantor, and each other Person which unconditionally guarantees the
Obligations.

          "GWF" shall mean Great White Fleet Ltd., a Bermuda company.

                                       13
<PAGE>

          "Hedging Agreements" shall mean any Interest Rate Protection Agreement
or other interest rate protection agreement, foreign currency exchange
agreement, commodity purchase or option agreement or other interest or exchange
rate or commodity price hedging agreements.

          "Highest Lawful Rate" shall mean, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness under this Credit
Agreement, under the laws of the State of New York (or the law of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Credit Agreement and the other Credit Documents), or under
applicable federal laws which may presently or hereafter be in effect and which
allow a higher maximum nonusurious interest rate than under New York or such
other jurisdiction's law, in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Credit Agreement and any other Credit Documents executed in connection herewith,
and any available exemptions, exceptions and exclusions.

          "Inactive Subsidiary" shall mean each Subsidiary (other than a
Guarantor, a Pledgor Entity or a Pledged Party) which (a) owns assets with a
book value of less than $1,000,000 as of the last day of the past fiscal year or
(b) had sales for the past fiscal year of less than $1,000,000 (as of the
Closing Date, the Inactive Subsidiaries are identified as such on Schedule 6.9
                                                                  ------------
hereto as Inactive Subsidiaries).

          "Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (d) all obligations of such Person issued
or assumed as the deferred purchase price of property or services purchased by
such Person (other than trade debt incurred in the ordinary course of business
and either due within six months of the incurrence thereof or incurred on longer
payment terms for the purchase of cans and related packaging products) which
would appear as liabilities on a balance sheet of such Person, (e) all
obligations of such Person under take-or-pay or similar arrangements or under
commodities agreements, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all guaranties of such Person with
respect to Indebtedness of the type referred to in this definition of another
Person, (h) the principal portion of all obligations of such Person under
Capital Leases, (i) all obligations of such Person under Hedging Agreements
(with the amount thereof, for the purposes of this Credit Agreement, being the
net amount thereof in accordance with GAAP), (j) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all drafts drawn thereunder
(to the extent unreimbursed), (k) all preferred Capital Stock issued by such
Person and required by the terms thereof to be redeemed, or for which mandatory
sinking fund payments are due, by a fixed date, (l) the principal portion of all
obligations of such Person under

                                       14
<PAGE>

synthetic leases, tax retention operating leases and other similar off-balance
sheet financing arrangements (but excluding true leases) and (m) the
Indebtedness of any partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer and for which such Person is
legally obligated.

          "Independent Accountant" shall mean a firm of independent public
accountants of nationally recognized standing selected by the Borrower, which is
"independent" as that term is defined in Rule 2-01 of Regulation S-X promulgated
by the Securities and Exchange Commission.

          "Indian River" shall mean The Packers of Indian River, Ltd., a limited
partnership formed under the laws of the state of Florida.

          "Initial Lender" shall mean Foothill or Ableco.

          "Insurance Premium Block" shall mean a block on Availability pursuant
to Section 2.1 hereof that is instituted at any time when the sum of (i)
   ------------
Availability (without giving effect to the Resolution Block) plus (ii) the
Borrower's and its Subsidiaries' (other than any Excluded Entity's) unrestricted
cash and Cash Equivalents, is less than $20,000,000. Such Insurance Premium
Block shall, as of any date of determination, be in an amount equal to the
lesser of (i) the Indebtedness then outstanding and permitted pursuant to clause
(d)(xiv) of the defined term "Permitted Indebtedness," or (ii) the amount of the
insurance premium that would be payable for 90 days of the insurance policy for
which the premium was financed as permitted pursuant to clause (d)(xiv) of the
defined term "Permitted Indebtedness."

          "Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
                              --------- -------
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrower may not elect an Interest Period which will end after the Maturity
Date.

          "Interest Rate" shall have the meaning given to such term in Section
4.1.                                                                   -------
---

          "Interest Rate Protection Agreement" shall mean any interest rate
protection agreement, foreign currency exchange agreement, commodity purchase or
option agreement or other interest or exchange rate or commodity price hedging
agreements between the Borrower and any Lender, or any affiliate of a Lender.

                                       15
<PAGE>

          "Internal Revenue" shall mean the Internal Revenue Service and any
successor agency.

          "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute thereto and all rules
and regulations promulgated thereunder.

          "Inventory" shall mean all of the Borrower's inventory, including
without limitation, (i) all raw materials, work in process, parts, components,
assemblies, supplies and materials used or consumed in the Borrower's business;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned to or repossessed by the Borrower.

          "Investment" in any Person shall mean (i) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or otherwise,
but exclusive of the acquisition of inventory, supplies, equipment and other
property or assets used or consumed in the ordinary course of business of the
Borrower or its Subsidiaries and Consolidated Capital Expenditures not otherwise
prohibited hereunder) of assets, shares of Capital Stock, bonds, notes,
debentures, partnership, joint ventures or other ownership interests or other
securities of such Person, (ii) any deposit (other than deposits constituting a
Permitted Lien) with, or advance, loan or other extension of credit (other than
sales of inventory or services on credit in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms and sales on
credit of the type described in clauses (c) or (d) of Section 9.3) to, such
                                                      ------------
Person or (iii) any other capital contribution to or investment in such Person,
including, without limitation, any obligation incurred for the benefit of such
Person. In determining the aggregate amount of Investments outstanding at any
particular time, (a) the amount of any Investment represented by a guaranty
shall be taken at not less than the maximum principal amount of the obligations
guaranteed and still outstanding; (b) there shall be deducted in respect of each
such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (c) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise; and (d) there shall not be deducted from the
aggregate amount of Investments any decrease in the market value thereof.

          "Issuing Bank" shall mean Foothill or any Person that is acceptable to
the Agent which shall issue an L/C Undertaking for the account of the Borrower.

          "Issuing Bank Fees" shall have the meaning given to such term in
Section 4.5(b).
------------

          "Joinder Agreement" shall mean an agreement in the form of Exhibit J
                                                                     ---------
attached hereto.

          "L/C Undertaking" shall mean a participation in, or a reimbursement or
indemnification undertaking with respect to, a Letter of Credit.

          "Lender" shall have the meaning given to such term in the preamble of
this Credit Agreement.

                                       16
<PAGE>

          "Lending Party" shall have the meaning given to such term in Section
14.7.                                                                  -------
----

          "Letter of Credit Committed Amount" shall have the meaning given to
such term in Section 3.1.
             ------------
          "Letter of Credit Documents" shall mean, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (i) the
rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.

          "Letter of Credit Fee" shall have the meaning given to such term in
Section 4.5(a).
--------------

          "Letter of Credit Obligations" shall mean, at any time, the sum of (i)
the aggregate undrawn amount of all Letters of Credit outstanding at such time,
plus (ii) the aggregate amount of all drawings under Letters of Credit for which
the Issuing Bank has not at such time been reimbursed, paid or repaid, plus
(iii) without duplication, the aggregate amount of all payments made by each
Lender to the Issuing Bank with respect to such Lender's participation in L/C
Undertakings as provided in Section 3.3 for which the Borrower has not at such
                            -----------
time reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.

          "Letters of Credit" shall mean the stand-by letters of credit issued
by an Underlying Issuer for the account of the Borrower for which an L/C
Undertaking has been provided or undertaken by the Issuing Lender, and all
amendments, renewals, extensions or replacements thereof.

          "Leverage Ratio" shall mean, for any date of determination, the ratio
of (i) GAAP Indebtedness of Borrower and its Subsidiaries (other than CPF and
its Subsidiaries) on that date to (ii) Consolidated EBITDA for the four quarters
ending on such date.

          "LIBOR Deadline" has the meaning set forth in Section 4.8(b)(i).
                                                        ------------------

          "LIBOR Notice" means a written notice in the form of Exhibit D-1.
                                                               ------------

          "LIBOR Option" has the meaning set forth in Section 4.8(a).
                                                      ---------------

          "LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum determined by Agent (rounded upwards, if necessary, to the
next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b)
100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.

          "LIBOR Rate Loan" means each portion of a Revolving Loan or the Term
Loan that bears interest at a rate determined by reference to the LIBOR Rate.

                                       17
<PAGE>

          "Lien(s)" shall mean any lien, license, claim, charge, pledge,
security interest, deed of trust, mortgage, or other encumbrance.

          "Loan" or "Loans" shall mean the Revolving Loans and/or the Term Loans
(or a portion of any Revolving Loan or Term Loan), individually or collectively,
as appropriate.

          "Loan Account" shall have the meaning set forth in Section 2.5.
                                                             ------------

          "Material Adverse Change" shall mean (a) a change in the business,
operations, assets, liabilities or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, or the Collateral, which in
either case would materially and adversely affect the ability of the Borrower
Entities, taken as a whole, to perform their obligations under the Credit
Documents, or (b) a material adverse change in the rights and remedies of the
Agent or any Lender thereunder.

          "Material Adverse Effect" shall mean (a) an effect on the business,
operations, assets, liabilities or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, or the Collateral, which in
either case would materially and adversely affect the ability of the Borrower
Entities, taken as a whole, to perform their obligations under the Credit
Documents, or (b) a material adverse effect on the rights and remedies of the
Agent or any Lender thereunder.

          "Material Contract" shall mean any contract (other than any of the
Credit Documents), whether written or oral, to which the Borrower or any of its
Subsidiaries is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.

          "Maturity Date" shall mean June 7, 2004.

          "Maximum Credit Line" means $130,000,000, as such amount may be
reduced from time to time pursuant to and in accordance with Section 2.3.
                                                             ------------

          "Mortgages" shall mean each mortgage, security agreement and fixture
filing, deed of trust or other real estate security document executed in favor
of or for the benefit of the Agent and/or the Lenders to secure any or all of
the Obligations.

          "Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA and (i) which is, or within the immediately
preceding six (6) years was, contributed to by the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate or (ii) with respect to which the Borrower
or any Subsidiary of the Borrower may incur any liability.

          "Net Cash Proceeds" shall mean the aggregate cash proceeds and Cash
Equivalents received by the Borrower or the applicable Subsidiary in respect of
any Asset Disposition, Specified Asset Disposition or Equity Issuance, net of
(a) direct costs (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and (b) taxes paid or payable as
a result thereof; it being understood that "Net Cash Proceeds" shall include,
without limitation, any cash received upon the sale or other disposition of any
non-cash

                                       18
<PAGE>

consideration received by the Borrower in any Asset Disposition, Specified Asset
Disposition or Equity Issuance.

          "Net Liquidation Value" shall mean the value of the Borrower's
trademarks and related rights, as set forth in the Appraisal.

          "Note" or "Notes" shall mean the Revolving Notes and/or the Term Loan
Notes, individually or collectively, as appropriate.

          "Notice of Borrowing" shall have the meaning given to such term in
Section 2.1(d)(i).
------------------

          "Obligations" shall mean the Loans, any other loans and advances or
extensions of credit made or to be made by any Lender to the Borrower, or to
others for the Borrower's account in each case pursuant to the terms and
provisions of this Credit Agreement, together with interest thereon (including
interest which would be payable as post-petition interest in connection with any
bankruptcy or similar proceeding) and, including, without limitation, any
reimbursement obligation or indemnity of the Borrower or its Subsidiaries on
account of Letters of Credit and all other Letter of Credit Obligations, and all
indebtedness, fees, liabilities and obligations which may at any time be owing
to the Agent or any Lender pursuant to this Credit Agreement or any other Credit
Document, whether now in existence or incurred from time to time hereafter,
whether unsecured or secured by pledge, Lien upon or security interest in any of
the Borrower's assets or property or the assets or property of any other Person,
whether such indebtedness is absolute or contingent, joint or several, matured
or unmatured, direct or indirect and whether the Borrower or any Subsidiary is
liable to the Agent or any Lender for such indebtedness as principal, surety,
endorser, guarantor or otherwise. Obligations shall also include any other
indebtedness owing to the Agent or any Lender under this Credit Agreement and
the other Credit Documents, the Borrower's liability to any Lender pursuant to
this Credit Agreement as maker or endorser of any promissory note or other
instrument for the payment of money, any liability to the Agent or any Lender
pursuant to this Credit Agreement or any other Credit Document under any
instrument of guaranty or indemnity, or arising under any guaranty, endorsement
or undertaking which the Agent or any Lender may make or issue to others for the
Borrower's account pursuant to this Credit Agreement, including any
accommodation extended with respect to applications for Letters of Credit, and
all liabilities and obligations owing from the Borrower to the Agent or any
Lender, or any affiliate of the Agent or a Lender, arising under Interest Rate
Protection Agreements entered into for the purpose of hedging interest rate risk
under this Credit Agreement.

          "Operative Documents" shall mean the Credit Documents and the Security
Documents.

          "Original Closing Date" shall mean March 7, 2001.

          "Original Credit Agreement" shall have the meaning given to such term
in the recitals to this Credit Agreement.

          "Original Obligations" shall mean "Obligations" as defined in the
Original Credit Agreement.

                                       19
<PAGE>

          "Original Term Loans" shall mean "Term Loans" as defined in the
Original Credit Agreement.

          "Other Taxes" shall have the meaning given to such term in Section
                                                                     -------
2.7(c).
-------

          "PACA" shall mean the Perishable Agricultural Commodities Act, 7
U.S.C.Section.499.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.

          "Permitted Acquisitions" shall mean an Acquisition by any Borrower
Entity of an Acquired Company which Acquisition complies with the following
requirements (in each case to the satisfaction of the Agent): (i) the Acquired
Company shall be an operating company that engages in a line of business
substantially similar to the business that one or more Borrower Entities engaged
in on the Original Closing Date, (ii) the Agent shall have received, if
available, a review of the financial condition of the Acquired Company conducted
by a firm of independent certified public accountants of nationally recognized
standing reasonably acceptable to the Agent and such other reports and analyses
in connection with the Acquisition as the Agent may reasonably request and an
internal summary of the results of the Borrower Entity's due diligence and/or
its economic justification for such Acquisition and the bases therefor
(excluding any information in any such report, analyses or summary to which the
attorney client privilege applies), (iii) the Agent shall have completed a field
examination relating to the applicable Acquired Company and the results thereof
are satisfactory to the Agent, (iv) the Agent shall have received all items
required by Sections 7.9, 7.10 and 7.16 in connection with the Acquired Company,
            ------------  ----     ----
(v) in the case of an Acquisition of the Capital Stock of another Person, the
board of directors (or other comparable governing body) of such other Person
shall have duly approved such Acquisition, (vi) the Borrower shall have
delivered to the Agent a pro forma compliance certificate demonstrating that,
upon giving effect to such Acquisition on a pro forma basis, the Borrower and
its Subsidiaries shall be in compliance with all of the covenants set forth in
Article VIII and no Default or Event of Default shall exist immediately prior to
------------
or immediately after the consummation of the Acquisition, and (viii) the
Borrower shall have delivered to the Agent all Acquisition Documents in
connection with such Permitted Acquisition which documents shall be reasonably
satisfactory to the Agent.

          "Permitted Indebtedness" shall mean Indebtedness which meets all of
the following tests at the time it is incurred: (a) if such Indebtedness is
incurred after the Original Closing Date, the Borrower, on a pro forma basis and
assuming such Indebtedness is incurred, would be in compliance with the
financial covenants set forth herein, (b) after giving effect to the incurrence
of such Indebtedness, the aggregate principal amount of all GAAP Indebtedness of
the Borrower and its Subsidiaries (including without duplication, GAAP
Indebtedness owing under the Credit Documents and GAAP Indebtedness of Excluded
Entities, but excluding Indebtedness owing by the Borrower to CBII and evidenced
by that certain Subordinated Promissory Note dated December 31, 2000 in an
original principal amount equal to $40,000,000) at such time (i) does not exceed
$540,000,000 at any time on a consolidated basis, or (ii) does not, when added,
without duplication, to all Indebtedness of such Persons of the types described
in clauses (f), (g), (j), (l) or (m) of the definition of Indebtedness (but, in
the case of clause (m), excluding Indebtedness of CTP arising solely by virtue
of its role as general partner of Indian

                                       20
<PAGE>

River), exceed $565,000,000 at all times, (c) after giving effect to the
incurrence of such Indebtedness, the aggregate principal amount of all GAAP
Indebtedness of the Borrower and its Subsidiaries (including without
duplication, GAAP Indebtedness owing under the Credit Documents and GAAP
Indebtedness of Excluded Entities (other than CPF and its Subsidiaries) but
excluding Indebtedness owing by the Borrower to CBII and evidenced by that
certain Subordinated Promissory Note dated December 31, 2000 in an original
principal amount equal to $40,000,000) at such time (i) does not exceed
$360,000,000 at any time, on a consolidated basis, or (ii) does not, when added,
without duplication, to all Indebtedness of such Persons of the types described
in clauses (f), (g), (j), (l) or (m) of the definition of Indebtedness (but, in
the case of clause (m), excluding Indebtedness of CTP arising solely by virtue
of its role as general partner of Indian River), exceed $385,000,000 at all
times and (d) Indebtedness which consists of:

          (i)   Indebtedness owing to the Agent and the Lenders with respect to
the Revolving Loans, the Term Loans, the Letters of Credit or otherwise,
pursuant to the Credit Documents;

          (ii)  trade payables incurred in the ordinary course of the business
and other payment obligations under grower contracts entered into in the
ordinary course of business;

          (iii) purchase money Indebtedness (including Capital Leases) hereafter
incurred by the Borrower or any of its Subsidiaries not otherwise constituting
Permitted Indebtedness and incurred to finance the purchase of fixed assets
provided that (A) the total of all such Indebtedness for all such Persons taken
--------
together shall not exceed an aggregate principal amount of $10,000,000 at any
one time outstanding (excluding any such Indebtedness referred to in clause (v)
immediately below); (B) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (C) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing;

          (iv)  obligations of the Borrower or any of its Subsidiaries in
respect of Hedging Agreements entered into in order to manage existing or
anticipated interest rate or exchange rate risks or commodity price fluctuations
and not for speculative purposes;

          (v)   Indebtedness described on Schedule 1.1D attached hereto and any
                                          ------------
refinancings or replacements of such Indebtedness; provided that the aggregate
                                                   --------
principal amount of such Indebtedness is not increased, the scheduled maturity
dates of such Indebtedness are not shortened and such refinancing is on terms
and conditions no more restrictive than the terms and conditions of the
Indebtedness being refinanced;

          (vi)  unsecured Indebtedness owing to the Borrower or a Subsidiary by
the Borrower or a Subsidiary, as long as the related Investment is permitted
hereunder;

          (vii) Indebtedness of Persons who are members of the Chiquita Fresh
European Group as long as (i) such Indebtedness is non-recourse to the Borrower
and each of its Subsidiaries which is not a member of the Chiquita Fresh
European Group, and (ii) such Indebtedness, when added to the aggregate
principal amount of all other Indebtedness of the members of the Chiquita Fresh
European Group (other than Indebtedness described in clause (vi)

                                       21
<PAGE>

above), is in an aggregate outstanding principal amount not to exceed
$30,000,000 at any time and is otherwise not prohibited by any document or
instrument to which one or more members of the Chiquita Fresh European Group is
a party;

          (viii) Indebtedness of Persons who are members of the Chiquita Fresh
Latin American Group as long as (i) such Indebtedness is non-recourse to the
Borrower and each of its Subsidiaries which is not a member of the Chiquita
Fresh Latin American Group and such Indebtedness is otherwise not prohibited by
any document or instrument to which one or more members of the Chiquita Fresh
Latin American Group is a party, and (ii) such Indebtedness, when added to the
aggregate principal amount of all other Indebtedness of the members of the
Chiquita Fresh Latin American Group (but excluding Back-to-Back Loans and other
Indebtedness described in clause (vi) above), is in an aggregate outstanding
principal amount not to exceed $35,000,000 at any time;

          (ix)   Indebtedness of GWF and its Subsidiaries as long as (i) such
Indebtedness is non-recourse to the Borrower and each of its Subsidiaries (other
than GWF) which is not a Subsidiary of GWF and such Indebtedness is otherwise
not prohibited by any document or instrument to which GWF or one or more of its
Subsidiaries is a party and (ii) the aggregate outstanding principal amount of
all such Indebtedness of GWF and its Subsidiaries, when added to the aggregate
principal amount of all other Indebtedness of GWF and its Subsidiaries (other
than Indebtedness described in clause (vi) above), does not exceed $225,000,000
at any time;

          (x)    Indebtedness of CPF and its Subsidiaries as long as (i) such
Indebtedness is non-recourse to the Borrower and each of its Subsidiaries (other
than CPF) which is not a Subsidiary of CPF and is otherwise not prohibited by
any document or instrument to which CPF or one or more of its Subsidiaries is a
party and (ii) the aggregate outstanding principal amount of all such
Indebtedness of CPF and its Subsidiaries when added to the aggregate principal
amount of all other Indebtedness of CPF and its Subsidiaries (other than
Indebtedness described in clause (vi) above), does not exceed $200,000,000 at
any time;

          (xi)   Indebtedness of Frupac or its Subsidiaries as long as (i) such
Indebtedness is non-recourse to the Borrower or any of its Subsidiaries (other
than Frupac) which is not a Subsidiary of Frupac and is otherwise not prohibited
by any document or instrument to which Frupac or one or more of its Subsidiaries
is a party and (ii) the aggregate outstanding principal amount of all such
Indebtedness of Frupac and its Subsidiaries when added to the aggregate
principal amount of all other Indebtedness of Frupac and its Subsidiaries (other
than Indebtedness described in clause (vi) above), does not exceed $25,000,000
at any time;

          (xii)  Indebtedness of PV and its Subsidiaries as long as (i) such
Indebtedness is non-recourse to the Borrower or any of its Subsidiaries (other
than PV) which is not a Subsidiary of PV and is otherwise not prohibited by any
document or instrument to which PV or one or more of its Subsidiaries is a party
and (ii) the aggregate outstanding principal amount of all Indebtedness of PV
and its Subsidiaries, when added to the aggregate principal amount of all other
Indebtedness of PV and its Subsidiaries (other than Indebtedness described in
clause (vi) above) does not exceed $35,000,000 at any time;

                                       22
<PAGE>

          (xiii) Indebtedness of CTP arising solely from its status as a general
partner of Indian River;

          (xiv)  Indebtedness in an amount not to exceed $15,000,000 outstanding
at any time incurred by Borrower to finance the payment of insurance premiums;
and

          (xv)   such other Indebtedness as the Required Lenders in their sole
and absolute discretion approve in writing.

          "Permitted Investments" shall mean:

          (i)    Cash Equivalents;

          (ii)   interest-bearing demand or time deposits (including
certificates of deposit) which are insured by the Federal Deposit Insurance
Corporation ("FDIC") or a similar federal insurance program; provided, however,
                                                             --------- -------
that the Borrower may, in the ordinary course of business, maintain in its
operating accounts from time to time amounts in excess of then applicable FDIC
or other program insurance limits;

          (iii)  Investments existing on the Original Closing Date and set forth
on Schedule 1.1E attached hereto (including capitalization of any intercompany
   -------------
advances shown thereon);

          (iv)   advances to officers, directors and employees of CBII, the
Borrower or any of its Subsidiaries for expenses incurred or anticipated to be
incurred in the ordinary course as long as (a) no advances to any one Person are
in excess of $250,000 in the aggregate at any time outstanding (except for a
one-time $750,000 advance to one employee) and (b) all such advances do not
exceed $5,000,000 in the aggregate at any time outstanding;

          (v)    Qualified Investments made in or to a Secured Credit Party;

          (vi)   Qualified Investments made by Persons other than members of the
Chiquita Fresh European Group in or to one or more Persons who are, as of the
Closing Date, members of the Chiquita Fresh Latin American Group (or Persons
which are Wholly-Owned Subsidiaries of such members of the Chiquita Fresh Latin
America Group) (it being agreed that a Back-to-Back Loan to any member of the
Chiquita Fresh Latin American Group shall, solely for the purposes of this
clause, constitute an Investment in or to such member of the Chiquita Fresh
Latin American Group and not an Investment in or to the applicable lender);

          (vii)  Qualified Investments made by Persons other than members of the
Chiquita Fresh Latin American Group in or to one or more Persons who are, as of
the Closing Date, members of the Chiquita Fresh European Group (or Persons which
are Wholly-Owned Subsidiaries of such members of the Chiquita Fresh European
Group), as long as the aggregate amount thereof made after the Original Closing
Date does not exceed $10,000,000 in any given fiscal year;

          (viii) Qualified Investments made by Persons who are members of the
Chiquita Fresh European Group in or to one or more Persons who are, as of the
Closing Date,members of

                                       23
<PAGE>

the Chiquita Fresh European Group (or Persons which are Wholly-Owned
Subsidiaries of such members of the Chiquita Fresh European Group);

          (ix)    Qualified Investments (other than those permitted pursuant to
clause (vi) above) made by Persons who are members of the Chiquita Fresh Latin
American Group as long as the aggregate outstanding amount thereof made after
the Original Closing Date does not exceed $15,000,000 at any one time;

          (x)     Qualified Investments (other than those permitted pursuant to
clause (vii) or (viii) above) made by Persons who are members of the Chiquita
Fresh European Group as long as the aggregate outstanding amount thereof made
after the Original Closing Date does not exceed $15,000,000 at any one time;

          (xi)    Qualified Investments made by the Secured Credit Parties
(other than Investments made in or to a member of the Chiquita Fresh Latin
American Group, members of the Chiquita Fresh European Group, an Excluded Entity
or an Inactive Subsidiary) as long as the aggregate outstanding amount thereof
made after the Original Closing Date does not exceed $15,000,000 at any time;

          (xii)   Investments made at a time when no Event of Default has
occurred and is continuing (other than by Excluded Entities) in independent
growers in the ordinary course of business as long as the aggregate outstanding
balance permitted under this clause (xii) do not exceed $10,000,000 at any time;

          (xiii) Investments made by one or more Excluded Entities;

          (xiv)   Loans made by the Borrower to Frupac which do not exceed
$25,000,000 outstanding at any time during the months of October to May and,
which do not exceed $5,000,000 outstanding at any time during the months of June
to September;

          (xv)    Loans made by Chiquita Banana Company B.V., a Netherlands
company, to CIL;

          (xvi)   Investments made by the Borrower in Citrus to the extent
required to service existing debt of Citrus but not to exceed $1,100,000 in any
fiscal year;

          (xvii)  Investments consisting of securities or debt instruments which
are proceeds of Specified Asset Dispositions or Asset Dispositions (to the
extent permitted by Section 9.3);
                    ------------

          (xviii) Investments described on Schedule 9.3A;
                                           -------------

          (xix)   A loan to CBII for Permitted Restructuring Expenses or any
transfer of funds as permitted by Section 9.6;
                                  -----------

          (xx)    such other Investments as the Required Lenders may approve in
their sole discretion;

                                       24
<PAGE>

          (xxi)   advances to CTP solely to the extent necessary to permit CTP
to make capital expenditures;

          (xxii)  advances consisting of the payment of insurance premiums by
the Borrower on insurance policies that insure the Borrower and one or more
Subsidiaries, Excluded Entities or CBII, as long as each such advance is repaid
to the Borrower by the applicable Subsidiary (other than Secured Credit
Parties), Excluded Entity or CBII within 90 days after the date on which such
advance was made;

          (xxiii) advances consisting of payment of insurance claim deductibles
and self-insured retentions by the Borrower on liability insurance policies that
insure the Borrower and one or more Subsidiaries, Excluded Entities or CBII,
provided (a) each such advance is repaid to the Borrower by the applicable
Subsidiary (other than Secured Credit Parties), Excluded Entity or CBII within
90 days after the date on which such advance was made; and (b) the aggregate
amount of such advances outstanding at any given time, excluding those made on
behalf of the Secured Credit Parties, does not exceed $1,000,000; and

          (xxiv)  indemnity obligations incurred by the Borrower to secure the
payment of insurance claim deductibles and self-insured retentions and to
support operational bonding obligations of one or more Subsidiaries, Excluded
Entities or CBII, provided that (a) any payment made by the Borrower in
compliance with such indemnity obligation is repaid to the Borrower by the
applicable Subsidiary (other than Secured Credit Parties), Excluded Entity or
CBII within 90 days after the date on which such payment was made, (b) any
letters of credit issued for the account of the Borrower shall be Letters of
Credit; and (c) the aggregate amount of the indemnity obligation of the Borrower
shall not exceed $3,000,000 for Subsidiaries (other than Secured Credit
Parties), Excluded Entities or CBII for any given annual policy year;

          Notwithstanding the foregoing, Permitted Investments shall not include
                                                                     ---
(i) Investments made in or to an Inactive Subsidiary (other than Investments
permitted pursuant to clauses (iii), (xxii), (xxiii) or (xxiv) above), (ii)
Investments made in or to an Excluded Entity (other than Investments permitted
pursuant to clause (iii), (xiv) or (xvi) or (xxii), (xxiii) and (xxiv) above and
Investments made by an Excluded Entity); (iii) Investments (other than as
described in clause (xix), (xxii), (xxiii) or (xxiv) above) made in or to CBII
or any Subsidiary of CBII which is not the Borrower or a Subsidiary of the
Borrower; and (iv) investments in or to CTP other than those permitted pursuant
to clause (xxi) above.

          "Permitted Liens" shall mean

          (i)    Liens granted to the Agent or the Lenders or any Affiliate of a
Lender pursuant to any Credit Document;

          (ii)   Liens listed on Schedule 1.1C attached hereto;
                                 -------------

          (iii)  Liens on fixed assets securing purchase money Indebtedness
(including Capital Leases) to the extent permitted under Section 9.2, provided
                                                         ------------ --------
that (A) any such Lien attaches to such assets concurrently with or within
thirty (30) days after the acquisition thereof and only to the assets to be
acquired and (B) a description of the assets so acquired is furnished to the
Agent;

                                       25
<PAGE>

          (iv)   Liens of warehousemen, mechanics, materialmen, workers,
repairmen, fillers, packagers, processors, common carriers, landlords and other
similar Liens arising by operation of law or otherwise, not waived in connection
herewith, for amounts that are not yet due and payable or which are being
diligently contested in good faith by the Borrower by appropriate proceedings,
provided that in any such case an adequate reserve is being maintained by the
--------
Borrower for the payment of same;

          (v)    attachment or judgment Liens individually or in the aggregate
not in excess of $250,000 (exclusive of (a) any amounts that are duly bonded to
the satisfaction of the Agent in its reasonable judgment or (b) any amount
adequately covered by insurance as to which the insurance company has
acknowledged in writing its obligations for coverage);

          (vi)   Liens for taxes, assessments or other governmental charges not
yet due and payable or which are being diligently contested in good faith by the
Borrower by appropriate proceedings, provided that in any such case an adequate
                                     --------
reserve is being maintained by the Borrower for the payment of same in
accordance with GAAP;

          (vii)  deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, or under unemployment insurance;

          (viii) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, regulatory or statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business;

          (ix)   Liens arising from claims under PACA;

          (x)    Liens on assets of GWF, CPF, PV or Frupac or their respective
Subsidiaries to secure Indebtedness of one or more of such Persons as long as
the owner of the assets which are the subject of such Liens is the primary
obligor on such Indebtedness (or is a Subsidiary or parent of such primary
obligor, provided that, in the case of a parent, such parent is an Excluded
Entity), as long as the applicable Indebtedness is permitted pursuant to clause
(ix), (x), (xi) or (xii) of the definition of Permitted Indebtedness herein;

          (xi)   Liens on assets of a Person (other than on Collateral or assets
intended to constitute Collateral) to secure Indebtedness of such Person
permitted hereunder;

          (xii)  Liens on insurance proceeds and unearned insurance premiums
which secure the Permitted Indebtedness described in clause (d)(xiv) of the
defined term "Permitted Indebtedness"; and

          (xiii) such other Liens as the Required Lenders, in their sole and
absolute discretion, approve in writing.

          "Permitted Restructuring Expenses" shall mean payments made on or
before March 31, 2002 to or for the benefit of CBII for legal, investment
banking and other professional fees and related expenses (including court costs)
incurred in connection with the proposed restructuring of CBII's Indebtedness
and which are made at a time when all of the following conditions are satisfied:
(i) no Event of Default has occurred and is continuing (or would be

                                       26
<PAGE>

caused thereby); (ii) the average Availability (without giving effect to the
Resolution Block) plus Borrower's and its Subsidiaries' (other than any Excluded
Entity's) unrestricted cash and Cash Equivalents for the thirty (30) day period
ending ten (10) days prior to the date of such payment was at least $20,000,000;
(iii) the amount of such payment, when added to all other payments made during
such fiscal quarter, other than any payment of the "Restructuring Fee" to The
Blackstone Group as contemplated by clause (iv) below and other than any payment
of the fee payable to Houlihan, Lokey, Howard & Zukin as contemplated by clause
(vi) below, does not exceed $3,000,000; provided that if the total of all such
                                        --------
payments made under this clause (iii) in any fiscal quarter shall be less than
$3,000,000, the unutilized portion of such $3,000,000 permitted payment may be
carried forward into subsequent fiscal quarters so long as aggregate payments,
other than any payment of the "Restructuring Fee", of more than $6,000,000 are
not made in any fiscal quarter; (iv) if the payment is to fund payment of the
"Restructuring Fee" owing to The Blackstone Group pursuant to that certain
engagement letter between The Blackstone Group and CBII dated November 6, 2000,
the amount of such payment shall not exceed the lesser of the maximum amount
owing for that fee and $7,600,000; (v) if the payment is made after the
commencement of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceeding by or against CBII, the payment shall be made
by way of a loan from Borrower to CBII which is protected by an appropriate
court order which is acceptable to the Agent and the Required Lenders and
specifically assigned to the Agent as Collateral; and (vi) if the payment is to
CBII to permit CBII to pay the success fee of Houlihan Lokey Howard & Zukin,
such success fee shall not exceed $5,000,000 and prior to the payment of such
success fee the Agent shall have received evidence of the CBII Reorganization
Consummation.

          "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, entity, party or government (including
any division, agency or department thereof), and, as applicable, the successors,
heirs and assigns of each.

          "Plan" shall mean any employee benefit plan, program or arrangement,
whether oral or written, maintained or contributed to by the Borrower or any
Subsidiary, or with respect to which the Borrower or any such Subsidiary may
incur liability.

          "Pledge Agreements" shall mean (i) that certain Stock Pledge Agreement
dated as of the Original Closing Date between the pledgors named therein and the
Agent, (ii) that certain LLC Pledge Agreement dated as of the Original Closing
Date between the pledgors named therein and the Agent and (iii) each other
agreement (other than a Security Agreement) pursuant to which the equity of any
Person is pledged to the Agent to secure the Obligations.

          "Pledged Party" shall mean each Person (other than a Credit Party)
whose equity, in whole or in part, is pledged to the Agent to secure the
Obligations.

          "Pledgor Entity" means each Person which has pledged equity in a
Pledged Party to the Agent to secure the Obligations.

          "Prime Rate" shall mean the rate which Wells Fargo announces from time
to time as its prime lending rate, as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer.Wells

                                       27
<PAGE>

Fargo (and its affiliates) may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.

          "Prime Rate Loan" means each portion of a Revolving Loan or the Term
Loan that bears interest at a rate determined by reference to the Prime Rate.

          "Pro Rata Share" of any Lender means a fraction, the numerator of
which is such Lender's Commitment and the denominator of which is the Aggregate
Commitment; provided, however, in the event all Commitments have been terminated
            --------  -------
or reduced to zero, Pro Rata Share shall be determined according to the
Commitments in effect immediately prior to such termination.

          "Proprietary Rights" shall have the meaning given to such term in
Section 6.18.
-------------

          "PV" shall mean Produce Ventures, L.L.C., a Delaware limited liability
company.

          "Qualified Investment" means an Investment which meets all of the
following tests: (i) it is made when no Default or Event of Default has occurred
and is continuing (or would be caused thereby), (ii) it is made to a Person
which is Solvent after giving effect to such Investment but ignoring
intercompany liabilities to the Borrower and its Subsidiaries, (iii) if it is a
loan, it is made to a Person which is not subject to any restriction,
contractual or otherwise, that would prohibit or restrain it from returning or
repaying such Investment, (iv) if it is an Investment described in clauses (ix),
(x) and (xi) of the definition of Permitted Investments, it is made when the
Borrower, immediately after giving effect thereto, has Availability of at least
$10,000,000 and (v) if such Investment is an Acquisition, it constitutes a
Permitted Acquisition.

          "Qualified Refinancing" shall mean a refinancing of this Credit
Agreement in which all of the Obligations are paid in full in cash and for which
Ableco or Foothill or an Affiliate thereof is agent.

          "Reportable Event" shall mean any of the events described in Section
4043 of ERISA and the regulations thereunder.

          "Required Lenders" shall mean, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent) and
holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of
(i) the aggregate Commitments or (ii) if the Commitments have been terminated,
the outstanding Loans and participation interests (including the participation
interests of the Issuing Bank in any Letters of Credit).

          "Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.

                                       28
<PAGE>

          "Resolution Block" means $10,000,000; provided, however, that such
                                                --------  -------
amount shall be reduced to $0 upon the last to occur of (i) the time at which
the Borrower provides the Agent the documents required to be provided by each
Secured Credit Party pursuant to Section 5.2(b) for each Credit Party (other
                                 -------------
than the Secured Credit Parties), (ii) the time at which a plan of
reorganization for CBII (which has been confirmed by an order of the applicable
bankruptcy court) becomes effective, (iii) the time at which the Agent is
satisfied that the Composite Guarantee and Charge dated March 6, 2002 between
the Companies (as defined therein) and the Agent has been filed or registered
with all appropriate Bermuda Governmental Authorities or (iv) the time at which
the Agent has received confirmation (in form and substance satisfactory to the
Agent) from each foreign counsel that has previously provided a legal opinion
regarding one or more Credit Documents, that no additional documents should be
executed or delivered and no additional actions, registrations or filings should
be taken or made under the applicable foreign law or practice to perfect or
protect the Agent and the Lenders or to otherwise afford the Agent and the
Lenders the full benefits intended to be afforded to the Agent and the Lenders
pursuant to this Agreement and the other Credit Documents.

          "Restricted Payment" shall mean (i) any cash dividend or other cash
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of the Borrower or any of its Subsidiaries, as the case may be,
now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of Capital Stock of the Borrower or any of its
Subsidiaries now or hereafter outstanding by the Borrower or any of its
Subsidiaries, as the case may be, except for any redemption, retirement, sinking
funds or similar payment payable solely in such shares of that class of stock or
in any class of stock junior to that class, (iii) any cash payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any shares of any class
of Capital Stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding, or (iv) any payment to any Affiliate of the Borrower except to the
extent expressly permitted in this Credit Agreement.

          "Retiree Health Plan" shall mean an "employee welfare benefit plan"
within the meaning of Section 3(1) of ERISA that provides benefits to persons
after termination of employment, other than as required by Section 601 of ERISA.

          "Revolving Credit Borrowing Base" shall have the meaning given to such
term in Section 2.1(b)(i).
        -----------------

          "Revolving Credit Borrowing Base Certificate" shall have the meaning
given to such term in Section 7.1(e)(i).
                      ------------------

          "Revolving Credit Committed Amount" shall mean, at any time, the
Maximum Credit Line less the principal balance of then outstanding Term Loans.

          "Revolving Loans" shall have the meaning given to such term in Section
2.1(b).                                                                  -------
------
          "Revolving Notes" shall have the meaning given to such term in Section
2.1(c).                                                                  -------
------

          "Secured Credit Parties" shall mean each Credit Party which is also a
party to a Security Agreement.

                                       29
<PAGE>

          "Securitization" has the meaning specified therefor in Section 2.10.
                                                                 ------------

          "Securitization Party" the meaning specified therefor in Section 2.10.
                                                                   ------------

          "Security Agreements" shall mean (i) the Security Agreement dated as
of the Original Closing Date between the Agent, the Borrower and the obligors
named therein, (ii) the Security Agreement dated as of the Original Closing Date
between the Agent and Chiquita (Canada) Inc., (iii) composite Guarantee and
Charge dated as of the Original Closing Date, as amended, by and among the Agent
and CIL, Banexpro Ltd., Catellia Ltd., Tela Railroad Company Ltd., Financiera
Agricola, Ltd., Financiera Estrella Ltd., and M.M. Holding Ltd. and (iv) each
other agreement (other than a Pledge Agreement) pursuant to which one or more
Persons grant a lien on any or all of their assets to the Agent to secure the
Obligations.

          "Security Documents" shall mean, collectively, the Security
Agreements, the Pledge Agreements, the Mortgages, any Acknowledgment Agreements
and any lockbox agreement or any other tri-party arrangement with respect to the
bank accounts of the Borrower.

          "Settlement Period" shall have the meaning given to such term in
Section 2.1(d)(ii).
-----------------

          "Solvent" shall mean, with respect to any Person, that (i) the fair
saleable value of such Person's assets exceeds all of its probable liabilities,
(ii) such Person does not have unreasonably small capital in relation to the
business in which it is or proposes to be engaged and (iii) such Person has not
incurred, and does not believe that it will incur, debts beyond its ability to
pay such debts as they become due.

          "Specified Asset Disposition" means each disposition of one or more of
the assets described on Schedule 9.3.
                        ------------

          "Subsidiary" shall mean, as to any Person, (a) any corporation more
than fifty percent (50%) of whose Capital Stock of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the directors
of such corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries, (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a fifty percent (50%) interest in the total capital,
total income and/or total ownership interests of such entity at any time and (c)
any partnership in which such Person is a general partner (it being agreed that
unless otherwise designated, "Subsidiary" shall mean any direct or indirect
"Subsidiary" of the Borrower); provided however, that neither Indian River nor
                               -------- -------
Heaton Holdings Ltd., a Cayman Islands company, shall constitute a Subsidiary of
the Borrower or any of its Subsidiaries, unless such entity is consolidated with
the Borrower or any of its Subsidiaries in accordance with GAAP.

          "Taxes" shall mean any federal, state, local or foreign income, sales,
use, transfer, payroll, personal, property, occupancy, franchise or other tax,
levy, impost, fee, imposition, assessment or similar charge, together with any
interest or penalties thereon.

                                       30
<PAGE>

          "Term Loans" shall have the meaning given to such term in Section
2.2(a).                                                             -------
------

          "Term Loan Committed Amount" shall mean the aggregate term loan
facility extended by the Lenders to the Borrower for Term Loans pursuant to and
in accordance with the terms of this Credit Agreement, in an amount up to
$70,000,000, as such term loan facility shall be reduced in accordance with
Section 2.3(c).
------------

          "Term Loan Notes" shall have the meaning given to such term in Section
2.2(e) hereof.
------------

          "Termination Event" shall mean (i) a Reportable Event with respect to
any Benefit Plan or Multiemployer Plan; (ii) the withdrawal of the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate from a Benefit Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Benefit Plan pursuant to Section 4041 of ERISA; (iv) the institution
by the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan;
(v) any event or condition (a) which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Benefit Plan or Multiemployer Plan, or (b) that may result in termination of
a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.

          "Trademark License Agreement" shall mean that certain Trademark
License Agreement dated November 1, 2001, by and between the Borrower and CIL.

          "Trademark Note" shall mean that certain Promissory Note executed by
CIL in favor of the Borrower dated November 1, 2001."

          "Tropical Farms" means farms (and related assets, including farm land
held in reserve but not currently planted) located in Guatemala, Chile,
Colombia, Panama, Honduras, Costa Rica, Guadeloupe, Martinique or Ivory Coast on
which bananas, plantains and similar produce is grown.

          "Unallocated CBII Overhead" shall mean the following overhead and
disbursements of CBII, but only to the extent that they are not otherwise
allocated to the Borrower and its consolidated Subsidiaries: salaries, pension
and benefit expenses, taxes (other than taxes on income or revenue), insurance
costs, legal expenses, communication and maintenance fees, travel expenses,
outside accounting fees, headquarter office expenses, deferred compensation and
non-contractual severance expenses, but excluding Permitted Restructuring
Expenses and principal, interest and other fees related to any Indebtedness.

          "Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a Letter of Credit at the request of the
Issuing Bank for the benefit of the Borrower.

          "Voting Stock" shall mean, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote

                                       31
<PAGE>

for the election of directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the happening of
such a contingency.

          "Wells Fargo" has the meaning set forth in the preamble hereto.

          "Wholly-Owned Subsidiary" of a Person means each entity in which
(other than directors' qualifying shares or the equivalent thereof required by
law) one hundred percent (100%) of the outstanding equity interests are directly
owned, beneficially and of record, by such Person or by one or more of such
Person's Wholly-Owned Subsidiaries.

     1.2 Accounting Terms and Determinations
         -----------------------------------

          Unless otherwise defined or specified herein, all accounting terms
shall be construed herein and all accounting determinations for purposes of
determining compliance with Sections 8.1 through 8.5 hereof and otherwise to be
                           -------------         ---
made under this Credit Agreement shall be made in accordance with GAAP applied
on a basis consistent in all material respects with the Financials. All
financial statements required to be delivered hereunder from and after the
Original Closing Date and all financial records shall be maintained in
accordance with GAAP as in effect as of the date of such financial statements.
If GAAP shall change from the basis used in preparing the Financials, the
certificates required to be delivered pursuant to Section 7.1 demonstrating
                                                  -----------
compliance with the covenants contained herein shall include calculations
setting forth the adjustments necessary to demonstrate how the Borrower is in
compliance with the financial covenants based upon GAAP as in effect as of the
date of the Financials. If the Borrower shall change its method of inventory
accounting, all calculations necessary to determine compliance with the
covenants contained herein shall be made as if such method of inventory
accounting had not been so changed. If the Borrower's financial statements or
the calculation of the covenants contained herein are impacted by "fresh start"
accounting as a result of or pursuant to the reorganization or restructuring of
CBII, the Borrower, the Agent and the Lenders agree to amend the provisions
hereof so that the criteria for evaluating the Borrower's financial condition
and performance will be the same as if such impact had not occurred.

     1.3 Other Definitional Terms.
         -------------------------

          Terms not otherwise defined herein which are defined in the Uniform
Commercial Code as in effect in the State of New York from time to time (the
"Code") shall have the meanings given them in the Code. The words "hereof",
 ----
"herein" and "hereunder" and words of similar import when used in this Credit
Agreement shall refer to the Credit Agreement as a whole and not to any
particular provision of this Credit Agreement, unless otherwise specifically
provided. References in this Credit Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided. Any of
the terms defined in Section 1.1 may, unless the context otherwise requires, be
                     -----------
used in the singular or plural depending on the reference. "Include", "includes"
and "including" shall be deemed to be followed by "without limitation" whether
or not they are in fact followed by such words or words of like import.
"Writing", "written" and comparable terms refer to printing, typing, computer
disk, e-mail and other means of reproducing words in a visible form. References
to any agreement or contract are to such agreement or contract as amended,
modified or supplemented from time to time in

                                       32
<PAGE>

accordance with the terms hereof and thereof. References to any Person include
the successors and permitted assigns of such Person. References "from" or
"through" any date mean, unless otherwise specified, "from and including" or
"through and including", respectively. References to any times herein shall
refer to Eastern Standard time or Eastern Daylight time, as then in effect.

                                  ARTICLE II.

                                      LOANS

     2.1  Revolving Loans.
          ----------------

          (a) Commitment. Subject to the terms and conditions hereof and in
              ----------
reliance upon the representations and warranties set forth herein, each of the
Lenders severally agrees to lend to the Borrower at any time or from time to
time on or after the Closing Date and before the Maturity Date, such Lender's
Pro Rata Share of the Revolving Loans as may be requested or deemed requested by
the Borrower.

          (b) Determination of Revolving Credit Borrowing Base.
              ------------------------------------------------

               (i) The Lenders agree, subject to the terms and conditions of
          this Credit Agreement, from time to time, to make loans and advances
          to the Borrower hereunder on a revolving basis. Such loans and
          advances to the Borrower (each, a "Revolving Loan"; and collectively,
          the "Revolving Loans") together with the Letter of Credit Obligations
          outstanding with respect to the Letters of Credit shall not in the
          aggregate exceed the least of ( the "Revolving Credit Borrowing
          Base"):

                    (A) the Revolving Credit Committed Amount at such time minus
               the aggregate amount of all Asset Sale Blocks, the Insurance
               Premium Block, the Resolution Block and all Farm Sale Blocks then
               in place;

                    (B) twenty-five percent (25%) of the Net Liquidation Value
               minus the aggregate amount of all Asset Sale Blocks, the
               Insurance Premium Block, the Resolution Block and all Farm Sale
               Blocks then in place;

                    (C) the following amount:

                         (1) an amount up to eighty-five percent (85%) of
                    Eligible Accounts Receivable; plus
                                                  ----

                         (2) twenty percent (20%) of the Net Liquidation Value,
                    minus
                    -----

                         (3) the aggregate amount of reserves established by the
                    Agent from time to time in its sole discretion, exercised in
                    a commercially reasonable manner and in good faith,
                    including,

                                       33
<PAGE>

                    without limitation, reserves for claims under PACA
                    (including, without limitation, a reserve in an amount equal
                    to all amounts then owed to Persons other than CIL for the
                    purchase of bananas and plantains) and reserves for accruals
                    to be paid to customers, minus
                                             -----

                         (4) the aggregate amount of all Asset Sale Blocks, the
                    Insurance Premium Block, the Resolution Block and all Farm
                    Sale Blocks then in place; or

                    (D) the amount equal to Consolidated EBITDA of the Borrower
               and its Subsidiaries (other than CPF and its Subsidiaries) as of
               the most recently completed twelve fiscal month period for which
               information is available (exclusive of unusual items as
               determined in accordance with GAAP and non-cash items to the
               extent not already excluded in determining Consolidated EBITDA)
               minus the sum of (1) the outstanding principal balance of the
               Term Loan and (2) the aggregate amount of all Asset Sale Blocks,
               the Insurance Premium Block, the Resolution Block and all Farm
               Sale Blocks then in place.

          Subject to the relevant terms and provisions set forth herein, the
          Agent at all times shall have the right to reduce or increase the
          advance rates (but not in excess of the advance rates set forth in the
          definition of Revolving Credit Borrowing Base) and standards of
          eligibility under this Credit Agreement, in each case in its sole
          discretion, exercised in a commercially reasonable manner and in good
          faith, if the Agent shall determine in its reasonable credit judgment
          that there is a risk that the Obligations may be undersecured as a
          result of a change in the condition or valuation of the Collateral.
          Such reduction or increase shall become effective after one (1)
          Business Day's prior notice from the Agent to the Borrower and the
          Lenders. Each Lender expressly authorizes the Agent to determine,
          subject to the terms of this Credit Agreement, on behalf of such
          Lender whether or not Accounts shall be deemed to constitute Eligible
          Accounts Receivable.

               (ii) No Lender shall be obligated at any time to make available
          to the Borrower its Pro Rata Share of any requested Revolving Loan if
          such amount plus its Pro Rata Share of all Revolving Loans, Letter of
          Credit Obligations and Term Loans then outstanding would exceed such
          Lender's Commitment at such time. No Lender shall be obligated to make
          available, nor shall the Agent make available, any Revolving Loans to
          the Borrower to the extent such Revolving Loan when added to the then
          outstanding Revolving Loans and all Letter of Credit Obligations would
          cause the aggregate outstanding Revolving Loans and all Letter of
          Credit Obligations to exceed the Revolving Credit Borrowing Base. The
          Borrower shall promptly repay to the Agent for the account of the
          Lenders from time to time the full amount of the excess, if any of (A)
          the amount of all Revolving Loans and Letter of Credit Obligations
          outstanding over (B) the lesser of (1) the Revolving Credit Committed
          Amount at such time and (2) the Revolving Credit Borrowing Base.

                                       34
<PAGE>

          (c) Revolving Notes. The obligations to repay the Revolving Loans and
              ---------------
to pay interest thereon shall be evidenced by separate promissory notes of the
Borrower to each Lender in substantially the form of Exhibit C-1 attached hereto
                                                     -----------
(the "Revolving Notes"), with appropriate insertions, one Revolving Note being
payable to the order of each Lender in a principal amount equal to such Lender's
Revolving Credit Committed Amount and representing the obligations of the
Borrower to pay such Lender the amount of such Lender's Revolving Credit
Committed Amount or, if less, the aggregate unpaid principal amount of all
Revolving Loans made by such Lender hereunder, plus interest accrued thereon, as
set forth herein. The Borrower irrevocably authorizes each Lender to make or
cause to be made appropriate notations on its Revolving Note, or on a record
pertaining thereto, reflecting Revolving Loans and repayments thereof. The
outstanding amount of the Revolving Loans set forth on such Lender's Revolving
Note or record shall be prima facie evidence of the principal amount thereof
                        ----- -----
owing and unpaid to such Lender, but the failure to make such notation or
record, or any error in such notation or record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Revolving Note to
make payments of principal of or interest on any Revolving Note when due.

          (d) Borrowings under Revolving Notes.
              --------------------------------

               (i) Subject to Section 4.8(b)(i), each request for borrowings
                              ----------------
          hereunder shall be made by a notice in the form attached hereto as
          Exhibit D from the Borrower to the Agent (a "Notice of Borrowing"),
          ---------
          given not later than 11:00 a.m. on the Business Day on which
          the proposed borrowing is requested to be made for Revolving Loans.
          Each Notice of Borrowing shall be given by either telephone or
          telecopy, and, if requested by the Agent, confirmed in writing if by
          telephone, setting forth (1) the requested date of such borrowing, (2)
          the aggregate amount of such requested borrowing, (3) certification by
          the Borrower that it has complied in all respects with Article 5, all
                                                                 ---------
          of which shall be specified in such manner asis necessary
          to comply with all limitations on Revolving Loans outstanding
          hereunder (including, without limitation, availability under the
          Revolving Credit Borrowing Base) and (4) the account at which such
          requested funds should be made available. Each Notice of Borrowing
          shall be irrevocable by and binding on the Borrower. The Borrower
          shall be entitled to borrow Revolving Loans in a minimum principal
          amount of $1,000,000 and integral multiples of $500,000 in excess
          thereof (or the remaining amount of the Revolving Credit Committed
          Amount at such time, if less). Revolving Loans may be repaid and
          reborrowed in accordance with the provisions hereof.

               The Agent shall give to each Lender prompt notice (but in no
          event later than 2:00 p.m. on the date of the Agent's receipt of
          notice from the Borrower) of each Notice of Borrowing by telecopy,
          telex or cable (other than any Notice of Borrowing which will be
          funded by the Agent in accordance with subsection (d)(ii) below). No
                                                 ------------------
          later than 3:00 p.m. on the date on which a borrowing is requested to
          be made pursuant to the applicable Notice of Borrowing, each Lender
          will make available to the Agent at the address of the Agent set forth
          on the signature pages hereto, in immediately available funds, its Pro
          Rata Share of such borrowing requested to be made. Unless the Agent
          shall have been notified by any Lender prior to the date of borrowing
          that such Lender does not intend to make available to the Agent its
          portion of the borrowing to be made on such

                                       35
<PAGE>

          date, the Agent may assume that such Lender will make such amount
          available to the Agent as required above and the Agent may, in
          reliance upon such assumption, make available the amount of the
          borrowing to be provided by such Lender. Upon fulfillment of the
          conditions set forth in Article V for such borrowing, the Agent will
                                  ---------
          make such funds available to the Borrower at the account specified by
          the Borrower in such Notice of Borrowing.

               (ii) Because the Borrower anticipates requesting borrowings of
          Revolving Loans on a daily basis and repaying Revolving Loans on a
          daily basis through the collection of Accounts and the proceeds of
          other Collateral, resulting in the amount of outstanding Revolving
          Loans fluctuating from day to day, in order to administer the
          Revolving Loans in an efficient manner and to minimize the transfer of
          funds between the Agent and the Lenders, the Lenders hereby instruct
          the Agent, and the Agent may (but is not obligated to) (A) make
          available, on behalf of the Lenders, the full amount of all Revolving
          Loans requested by the Borrower not to exceed $20,000,000 in the
          aggregate at any one time outstanding without requiring that the
          Borrower give the Agent a Notice of Borrowing with respect to such
          borrowing and without giving each Lender prior notice of the proposed
          borrowing, of such Lender's Pro Rata Share thereof and the other
          matters covered by the Notice of Borrowing and (B) if the Agent has
          made any such amounts available as provided in clause (A), upon
          repayment of Revolving Loans by the Borrower, apply such amounts
          repaid directly to the amounts made available by the Agent in
          accordance with clause (A) and not yet settled as described below;
          provided that the Agent shall not advance funds as described in clause
          --------
          (A) above if the Agent has actually received prior to such borrowing
          (1) an officer's certificate from the Borrower pursuant to and in
          accordance with Section 7.1(j) that a Default or Event of Default is
                          --------------
          in existence or (2) a Notice of Borrowing from the Borrower wherein
          the certification provided therein states that the conditions to the
          making of the requested Revolving Loans have not been satisfied or (3)
          a written notice from any Lender that the conditions to such borrowing
          have not been satisfied, which officer's certificate, Notice of
          Borrowing or notice, in each case, shall not have been rescinded. If
          the Agent advances Revolving Loans on behalf of the Lenders, as
          provided in the immediately preceding sentence, the amount of
          outstanding Revolving Loans and each Lender's Pro Rata Share thereof
          shall be computed weekly rather than daily and shall be adjusted
          upward or downward on the basis of the amount of outstanding Revolving
          Loans as of 5:00 p.m. on the Business Day immediately preceding the
          date of each computation; provided, however, that the Agent retains
                                    --------  -------
          the absolute right at any time or from time to time to make the
          aforedescribed adjustments at intervals more frequent than weekly. The
          Agent shall deliver to each of the Lenders after the end of each week,
          or such lesser period or periods as the Agent shall determine, a
          summary statement of the amount of outstanding Revolving Loans for
          such period (such week or lesser period or periods being hereafter
          referred to as a "Settlement Period"). If the summary statement is
          sent by the Agent and received by the Lenders prior to 12:00 Noon on
          any Business Day each Lender shall make the transfers described in the
          next succeeding sentence no later than 3:00 p.m. on the day such
          summary statement was sent; and if such summary statement is sent by
          the Agent and received by the Lenders after 12:00 Noon on any Business
          Day, each Lender shall make such transfers no later than 3:00 p.m. on
          the next succeeding Business Day. If in any Settlement Period, the
          amount of a Lender's Pro Rata Share of the Revolving

                                       36
<PAGE>

          Loans is in excess of the amount of Revolving Loans actually funded by
          such Lender, such Lender shall forthwith (but in no event later than
          the time set forth in the next preceding sentence) transfer to the
          Agent by wire transfer in immediately available funds the amount of
          such excess; and, on the other hand, if the amount of a Lender's Pro
          Rata Share of the Revolving Loans in any Settlement Period is less
          than the amount of Revolving Loans actually funded by such Lender, the
          Agent shall forthwith transfer to such Lender by wire transfer in
          immediately available funds the amount of such difference. The
          obligation of each of the Lenders to transfer such funds shall be
          irrevocable and unconditional and without recourse to or warranty by
          the Agent. Each of the Agent and the Lenders agree to mark their
          respective books and records at the end of each Settlement Period to
          show at all times the dollar amount of their respective Pro Rata
          Shares of the outstanding Revolving Loans. Because the Agent on behalf
          of the Lenders may be advancing and/or may be repaid Revolving Loans
          prior to the time when the Lenders will actually advance and/or be
          repaid Revolving Loans, interest with respect to Revolving Loans shall
          be allocated by the Agent to each Lender (including the Agent) in
          accordance with the amount of Revolving Loans actually advanced by and
          repaid to each Lender (including the Agent) during each Settlement
          Period and shall accrue from and including the date such Revolving
          Loans are advanced by the Agent to but excluding the date such
          Revolving Loans are repaid by the Borrower in accordance with Section
                                                                        -------
          2.4 or actually settled by the applicable Lender as described in this
          ---
          Section 2.1(d)(ii).
          ------------------

               (iii) If the amounts described in subsection (d)(i) or (d)(ii) of
                                                 -----------------    ------
          this Section 2.1 are not in fact made available to the Agent by a
               -----------
          Lender (such Lender being hereinafter referred to as a "Defaulting
          Lender") and the Agent has made such amount available to the Borrower,
          the Agent shall be entitled to recover such corresponding amount on
          demand from such Defaulting Lender. If such Defaulting Lender does not
          pay such corresponding amount forthwith upon the Agent's demand
          therefor, the Agent shall promptly notify the Borrower and the
          Borrower shall immediately (but in no event later than five (5)
          Business Days after such demand) pay such corresponding amount to the
          Agent. The Agent shall also be entitled to recover from such
          Defaulting Lender and the Borrower, (A) interest on such corresponding
          amount in respect of each day from the date such corresponding amount
          was made available by the Agent to the Borrower to the date such
          corresponding amount is recovered by the Agent, at a rate per annum
          equal to either (1) if paid by such Defaulting Lender, the overnight
          Federal Funds Rate or (2) if paid by the Borrower, the then applicable
          rate of interest, calculated in accordance with Section 4.1, plus (B)
                                                          -----------
          in each case, an amount equal to any costs (including legal expenses)
          and losses incurred as a result of the failure of such Defaulting
          Lender to provide such amount as provided in this Credit Agreement.
          Nothing herein shall be deemed to relieve any Lender from its
          obligation to fulfill its commitments hereunder or to prejudice any
          rights which the Borrower may have against any Lender as a result of
          any default by such Lender hereunder, including, without limitation,
          the right of the Borrower to seek reimbursement from any Defaulting
          Lender for any amounts paid by the Borrower under clause (B) above on
          account of such Defaulting Lender's default.

               (iv)  The failure of any Lender to make the Revolving Loan to be
          made by it as part of any borrowing shall not relieve any other Lender
          of its obligation, if any, hereunder to make its Revolving Loan on the
          date of such borrowing, but no Lender shall

                                       37
<PAGE>

          be responsible for the failure of any other Lender to make the
          Revolving Loan to be made by such other Lender on the date of any
          borrowing.

               (v)  Each Lender shall be entitled to earn interest at the then
          applicable rate of interest, calculated in accordance with Article IV,
          on outstanding Revolving Loans which it has funded to the Agent from
          the date such Lender funded such Revolving Loan to, but excluding, the
          date on which such Lender is repaid with respect to such Revolving
          Loan.

               (vi) Notwithstanding the obligation of the Borrower to send
          written confirmation of a Notice of Borrowing made by telephone if and
          when requested by the Agent, in the event that the Agent agrees to
          accept a Notice of Borrowing made by telephone, such telephonic Notice
          of Borrowing shall be binding on the Borrower whether or not written
          confirmation is sent by the Borrower or requested by the Agent. The
          Agent may act prior to the receipt of any requested written
          confirmation, without any liability whatsoever, based upon telephonic
          notice believed by the Agent in good faith to be from the Borrower or
          its agents. The Agent's records of the terms of any telephonic Notices
          of Borrowing shall be conclusive on the Borrower in the absence of
          gross negligence or willful misconduct on the part of the Agent in
          connection therewith.

     2.2 Term Loans.
         ----------

          (a) Term Loan Commitments. Immediately prior to the date hereof, the
              ---------------------
aggregate outstanding principal amount of the Original Term Loans was
$69,800,000. Subject to the terms and conditions hereof and in reliance upon the
representations and warranties set forth herein, on the date hereof the Original
Term Loans shall be increased by an amount equal to $200,000 and the resulting
balance of the Original Term Loans equal to $70,000,000 shall be converted to
and restated as Term Loans outstanding hereunder effective on the Closing Date.
Once Term Loans are paid or prepaid, they may not be reborrowed. The Term Loan
Committed Amount shall be automatically and permanently reduced by the amount of
Term Loans made.

          (b) [Intentionally Deleted]

          (c) [Intentionally Deleted]

          (d) Repayment of Term Loans. The principal amount of the Term Loans
              ----------------------
shall be repaid in consecutive monthly payments on the first day of each
calendar month commencing with the first day of October, 2002 and continuing
thereafter until the Term Loans are repaid in full. The amount of each such
payment (other than the final payment) shall equal $1,250,000. The amount of the
final payment shall be an amount equal to the then outstanding principal balance
of the Term Loans.

          (e) Term Notes. The obligations to repay the Term Loans and to pay
              ----------
interest thereon shall be evidenced by separate promissory notes of the Borrower
to each Lender in substantially the form of Exhibit C-2 attached hereto (the
                                            -----------
"Term Loan Notes"), with appropriate insertions, one Term Loan Note being
payable to the order of each Lender in a principal amount equal to such Lender's
Pro Rata Share of the Term Loans and representing the obligations of the
Borrower to pay such Lender the amount of such Lender's Pro Rata Share of the
Term Loans or,

                                       38
<PAGE>

if less, the aggregate unpaid principal amount of the Term Loans made by such
Lender hereunder, plus interest accrued thereon, as set forth herein. The
Borrower irrevocably authorizes each Lender to make or cause to be made
appropriate notations on its Term Loan Note, or on a record pertaining thereon,
reflecting Term Loans and repayments thereof. The outstanding amount of the Term
Loans set forth on such Lender's Term Loan Note or record shall be prima facie
                                                                   -----------
evidence of the principal amount thereof owing and unpaid to such Lender, but
the failure to make such notation or record, or any error in such notation or
record shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any Term Loan Note to make payments of principal of or
interest on any Term Loan Note when due.

     2.3 Optional and Mandatory Prepayments.
         ----------------------------------

          (a) Voluntary Prepayments. Except as set forth below, the Borrower
              ---------------------
shall have the right to prepay Loans in whole or in part from time to time,
without premium or penalty; provided, however, that each such partial prepayment
                            -------- --------
of Loans shall be in a minimum principal amount of $1,000,000 and integral
multiples of $500,000 in excess thereof. Subject to the foregoing terms, amounts
prepaid under this Section 2.3(a) shall be applied first to Revolving Loans and
                  --------------
then to the Term Loans. Voluntary prepayments on Term Loans shall not be
permitted unless, immediately prior to such prepayment, the aggregate
Commitments are equal to the then outstanding principal amount of the Term
Loans. All voluntary prepayments of the Term Loans shall be applied to the
remaining principal installments thereof in the inverse order of maturity
thereof. The Borrower has the option, at any time upon ninety (90) days prior
written notice to Agent, to terminate this Credit Agreement by paying to Agent,
in cash, the Obligations (including either (i) providing cash collateral to be
held by Agent in an amount equal to one hundred five percent (105%) of the then
extant Letter of Credit Obligations, or (ii) causing the original Letters of
Credit to be returned to the Issuing Bank), in full, together with the
Applicable Prepayment Premium (which may be allocated based upon letter
agreements between Agent and individual Lenders). If the Borrower has sent a
notice of termination pursuant to the provisions of this section, then the
Commitments shall terminate and the Borrower shall be obligated to repay the
Obligations (including either (i) providing cash collateral to be held by Agent
in an amount equal to one hundred five percent (105%) of the then extant Letter
of Credit Obligations, or (ii) causing the original Letters of Credit to be
returned to the Issuing Bank (with an applicable authorization to cancel such
Letters of Credit), in full, together with the Applicable Prepayment Premium, on
the date set forth as the date of termination of this Credit Agreement in such
notice. In the event of the termination of this Credit Agreement and repayment
of the Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination after the occurrence of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any insolvency
or bankruptcy related proceeding, or (iv) restructure, reorganization or
compromise of any or all of the Obligations by the confirmation of a plan of
reorganization or any other plan of compromise, restructuring, or arrangement in
any insolvency or bankruptcy related proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Agent and the Lenders or profits lost by the Agent and the
Lenders as a result of such early termination, and by mutual agreement of the
parties as to a reasonable estimation and calculation of the lost profits or
damages of the Agent and the Lenders, Borrower shall pay the Applicable
Prepayment Premium to Agent (which may be allocated based upon letter agreements
between Agent and individual Lenders).

                                       39
<PAGE>

          (b) Mandatory Prepayments.
              ---------------------

               (i)  Revolving Credit Committed Amount. If at any time, the sum
                    ---------------------------------
          of the aggregate principal amount of outstanding Revolving Loans plus
          Letter of Credit Obligations outstanding shall exceed the amount of
          the Revolving Credit Borrowing Base, the Borrower immediately shall
          prepay, subject to Section 4.8(c), the Revolving Loans, and (after all
                             --------------
          Revolving Loans have been repaid) cash collateralize the Letter of
          Credit Obligations, in an amount sufficient to eliminate such excess.

               (ii)  Asset Loss. To the extent of Net Cash Proceeds received in
                     ----------
          connection with an Asset Loss, the Borrower shall prepay the Loans in
          an amount equal to one hundred percent (100%) of such Net Cash
          Proceeds unless the Agent shall have elected not to apply the proceeds
          realized from such Asset Loss to the prepayment of the Loans (any such
          prepayment under this Section 2.3(b)(ii) to be applied, subject to
                                ------------------
          Section 4.8(c), as set forth in clause (v) below).
          --------------

               (iii) Asset Transfers. Promptly and in any event within one (1)
                     ---------------
          day following the occurrence of any Asset Disposition, the Borrower
          shall prepay the Loans in an aggregate amount equal to one hundred
          percent (100%) of the Net Cash Proceeds of the such Asset Disposition
          (any such prepayment under this Section 2.3(b)(iii) to be applied,
                                          -------------------
          subject to Section 4.8(c), as set forth in clause (v) below); unless
                     --------------
          the Net Cash Proceeds of an Asset Disposition do not exceed
          $1,000,000, in which case, the Borrower shall prepay the Loans within
          thirty (30) days of the end of the fiscal month in which such Asset
          Disposition took place. Promptly and in any event within one (1) day
          following the occurrence of any Specified Asset Disposition, the
          Borrower shall prepay the Loans in an aggregate amount equal to the
          greater of (a) seventy-five percent (75%) of the Net Cash Proceeds of
          such Specified Asset Disposition or (b) the amount set forth opposite
          the description of the applicable assets on Schedule 9.3 (any such
                                                      ------------
          prepayment under this Section 2.3(b)(iii) to be applied, subject to
                                -------------------
          Section 4.8(c), as set forth in clause (v) below).
          --------------

               (iv)  Issuances of Equity. Promptly and in any event within five
                     -------------------
          (5) days following the receipt by the Borrower of Net Cash Proceeds
          from any Equity Issuance occurring after the Original Closing Date,
          the Borrower shall prepay the Loans in an aggregate amount equal to
          one hundred percent (100%) of the Net Cash Proceeds of such Equity
          Issuance (any such prepayment under this Section 2.3(b)(iv) to be
                                                   ------------------
          applied, subject to Section 4.8(c), as set forth in clause (v) below).
                              --------------
          Promptly and in any event within one (1) day following the receipt of
          any payment under or pursuant to the Trademark License Agreement or
          Trademark Note, the Borrower shall prepay the Loans in an aggregate
          amount equal to one hundred percent (100%) of the Net Cash Proceeds
          received (any such payment under this Section 2.3(b)(iv) to be
                                                -----------------
          applied, subject to Section 4.8(c), as set forth in clause (v) below);
                              --------------
          provided however, if, at the time of such receipt no Default or Event
          -------- -------
          of Default has occurred and is continuing, no such prepayment shall be
          required pursuant to this sentence.

               (v) Application of Mandatory Prepayments. All amounts required to
                   ------------------------------------
          be paid pursuant to this Section 2.3(b) shall be applied, subject to
                                   --------------
          Section 4.8(c), as
          --------------

                                       40
<PAGE>

          follows: (A) with respect to all amounts prepaid pursuant to Section
          2.3(b)(i), to Revolving Loans and (after all Revolving
          ----------------- Loans have been repaid) to a cash collateral account
          in respect of Letter of Credit Obligations, (B) with respect to all
          amounts prepaid pursuant to Section 2.3(b)(ii) in connection with an
          ------------------ Asset Loss, (1) first to the Term Loans, to be
          applied to the remaining principal installments thereof in the inverse
          order of maturity and (2) second to the Revolving Loans and (after all
          Revolving Loans have been repaid) to a cash collateral account in
          respect of Letter of Credit Obligations, (C) with respect to all
          amounts prepaid pursuant to Section 2.3(b)(iii), (1) first to the
          ------------------ Term Loans, to be applied to the remaining
          principal installments thereof in the inverse order of maturity, and
          (2) second to the Revolving Loans and (after all Revolving Loans have
          been repaid) to a cash collateral account in respect of Letter of
          Credit Obligations and (D) with respect to all amounts prepaid
          pursuant to Section 2.3(b)(iv), unless the Borrower shall otherwise
          elect ----------------- a different application in its discretion (1)
          first to the Revolving Loans and (after all Revolving Loans have been
          repaid) to a cash collateral account in respect of Letter of Credit
          Obligations and (2) second to the Term Loans, to be applied pro rata
          to the remaining principal installments thereof. So long as no Event
          of Default shall have occurred and be continuing, amounts on deposit
          in any cash collateral account in respect of Letter of Credit
          Obligations shall be remitted promptly to the Borrower upon
          satisfaction of such Letter of Credit Obligations. Upon and during the
          continuance of an Event of Default, amounts on deposit in any cash
          collateral account in respect of Letter of Credit Obligations shall be
          applied in accordance with the Security Agreement. Upon each
          application of funds pursuant to this Section 2.3(b)(v) (other than
          pursuant to clause ---------------- 2.3(b)(v)(A)) to the Term Loans,
          Revolving Loans or to a cash collateral account in respect of Letter
          of Credit Obligations, (i) the Maximum Credit Line shall be reduced by
          the amount so applied and (ii) each Lender's Commitment shall be
          reduced by its Pro Rata Share of the amount so applied.

          (c) Voluntary Reductions. The Borrower may from time to time
              --------------------
permanently reduce or terminate the Maximum Credit Line in whole or in part (in
minimum aggregate amounts of $5,000,000 or in integral multiples of $5,000,000
in excess thereof (or, if less, the full remaining amount of the then applicable
Commitments)) upon three (3) Business Days' prior written notice to the Agent;
provided, however, that no such termination or reduction shall be made which
--------  -------
would cause the aggregate principal amount of (i) Term Loans to exceed the
Maximum Credit Line or (ii) Revolving Loans plus Letter of Credit Obligations
outstanding t-o exceed the Revolving Credit Borrowing Base, unless, concurrently
with such termination or reduction, Loans are repaid to the extent necessary to
eliminate such excess. The Agent shall promptly notify each affected Lender of
receipt by the Agent of any notice from the Borrower pursuant to this Section
                                                                      -------
2.3(c). Upon each reduction in the Maximum Credit Line, each Lender's Commitment
------
shall be reduced by its Pro Rata Share of the amount of such reduction.

          (d) Maturity Date. The Commitments of the Lenders and the Letter of
              -------------
Credit Commitment of the Issuing Bank shall automatically terminate on the
Maturity Date.

     2.4 Payments and Computations.
         --------------------------

          (a) The Borrower shall make each payment hereunder and under the Notes
not later than 2:00 p.m. on the day when due. Payments made by the Borrower
shall be in

                                       41
<PAGE>

Dollars to the Agent at its address referred to in Section 14.5 hereof in
                                                   ------------
immediately available funds without deduction, withholding, setoff or
counterclaim. As soon as practicable after the Agent receives payment from the
Borrower, but in no event later than one (1) Business Day after such payment has
been made, subject to Section 2.1(d)(ii), the Agent will cause to be distributed
                      ------------------
like funds relating to the payment of principal, interest, or Fees (other than
amounts payable to the Agent to reimburse the Agent and the Issuing Bank for
fees and expenses payable solely to them pursuant to Article IV hereof) or
                                                     ----------
expenses payable to the Agent and the Lenders in accordance with Section 14.8
                                                                 ------------
hereof ratably to the Lenders, and like funds relating to the payment of any
other amounts payable to such Lender. The Borrower's obligations to the Lenders
with respect to such payments shall be discharged by making such payments to the
Agent pursuant to this Section 2.4(a) or if not timely paid or any Event of
                       -------------
Default then exists, may be added to the principal amount of the Revolving Loans
outstanding.

          (b) The Borrower hereby authorizes each Lender to charge from time to
time against any or all of the Borrower's accounts with such Lender any of the
Obligations which are then due and payable. Each Lender receiving any payment as
a result of charging any such account shall promptly notify the Agent thereof
and make such arrangements as the Agent shall request to share the benefit
thereof in accordance with Section 2.8.
                           -----------

          (c) Any payments falling due under this Credit Agreement on a day
other than a Business Day shall be due and payable on the next succeeding
Business Day and shall accrue interest at the applicable interest rate provided
for in this Credit Agreement to but excluding such Business Day. Computation of
interest and fees hereunder shall be made on the basis of actual number of days
elapsed over a 360 day year.

     2.5 Maintenance of Account; Register.
         --------------------------------

          (a) The Agent shall maintain an account (the "Loan Account") on its
books in the name of the Borrower in which the Borrower will be charged with all
loans and other extensions of credit made by Agent and the Lenders (including,
without limitation, the Issuing Bank) to the Borrower or for the Borrower's
account, including the Revolving Loans, the Term Loans, the Letter of Credit
Obligations and any other Obligations, including any and all costs, expenses and
attorney's fees which the Agent may incur, including, without limitation, in
connection with the exercise by or for the Lenders of any of the rights or
powers herein conferred upon the Agent (other than in connection with any
assignments or participations by any Lender) or in the prosecution or defense of
any action or proceeding by or against the Borrower or the Lenders concerning
any matter arising out of, connected with, or relating to this Credit Agreement
or the Accounts, or any Obligations owing to the Lenders by the Borrower. In no
event shall prior recourse to any Accounts or other Collateral be a prerequisite
to the Agent's right to demand payment of any Obligation upon its maturity.
Further, it is understood that the Agent shall have no obligation whatsoever to
perform in any respect any of the Borrower's contracts or obligations relating
to the Accounts.

          (b) The Borrower agrees to record the amount of each Revolving Loan
and each Term Loan on the Register referred to in Section 14.6. Each Revolving
                                                  ------------
Loan and each Term Loan recorded on the Register (the "Registered Loan") may not
be evidenced by promissory notes other than a Registered Note (as defined
below). Upon the registration of any

                                       42
<PAGE>

Revolving Loan or a Term Loan, any promissory note (other than a Registered
Note) evidencing the same shall be null and void and shall be returned to the
Borrower. The Borrower agrees, at the request of any Lender, to execute and
deliver to such Lender a promissory note in registered form to evidence such
Registered Loan (i.e. containing registered note language) and registered as
provided in Section 14.6 (a "Registered Note"), payable to the order of such
            ------------
Lender and otherwise duly completed. Once recorded on the Register, the
Obligations evidenced by such Note may not be removed from the Register so long
as it remains outstanding, and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note.

     2.6 Statement of Account
         --------------------

          After the end of each month the Agent shall send the Borrower a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between the Lenders and the Borrower during that month.
The monthly statements shall be deemed correct and binding upon the Borrower and
shall constitute an account stated between the Borrower and the Lenders unless
the Agent receives a written statement of the Borrower's exceptions within
thirty (30) days after same is mailed to the Borrower.

     2.7 Taxes.
         -----

          (a) Any and all payments by the Borrower hereunder or under the Notes
to or for the benefit of any Lender shall be made, in accordance witwh Section
                                                                       -------
2.4, free and clear of and without deduction for any and all present or future
---
Taxes, deductions, charges or withholdings and all liabilities with respect
thereto, excluding, in the case of each such Lender and the Agent, Taxes imposed
on or measured by the Agent's or any Lender's net income or receipts or
franchise taxes or taxes measured by the Agent's or such Lender's, as
applicable, net worth by the jurisdiction under the laws of which such Lender or
the Agent, as applicable, is organized or maintains a lending office (any such
excluded Taxes, collectively, "Excluded Taxes"). If the Borrower shall be
required by law to deduct any Taxes (other than Excluded Taxes) from or in
respect of any sum payable hereunder or under any Note to or for the benefit of
any Lender or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions of Taxes (including
deductions of Taxes applicable to additional sums payable under this Section
                                                                     -------
2.7) such Lender or the Agent, as the case may be, receives an amount equal to
---
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount so deducted to the relevant taxation authority or other authority in
accordance with applicable law; provided, however, that the Borrower shall be
                                --------  -------
under no obligationto increase the sum payable to any Lender not organized under
the laws of the United States or a state thereof (a "Foreign Lender") by an
amount equal to the amount of the U.S. Tax required to be withheld under United
States law from the sums paid to such Foreign Lender, if such withholding is
caused by the failure of such Foreign Lender to be engaged in the active conduct
of a trade or business in the United States or all amounts of interest and fees
to be paid to such Foreign Lender hereunder are not effectively connected with
such trade or business within the meaning of U.S. Treasury Regulation
1.1441-4(a).

          (b) Each Foreign Lender agrees that it will deliver to the Borrower
and the Agent (i) two duly completed copies of United States Internal Revenue
Service Form W-8BEN

                                       43
<PAGE>

or W-8ECI or successor applicable form(s), as the case may be, and (ii) an
Internal Revenue Service Form W-8 or W-9 or successor applicable form, together
with any other certificate or statement of exemption required under the Internal
Revenue Code or regulations issued thereunder. Each such Lender also agrees to
deliver to the Borrower and the Agent two (2) further copies of the said Form
W-8BEN or W-8ECI and Form W-8 or W-9, or successor applicable forms or other
manner of certification, as the case may be, on or before the date that any such
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower or the Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advises the
Borrower and the Agent. Such Lender shall certify (A) in the case of a Form
W-8BEN or W-8ECI, that it is entitled to receive payments under this Credit
Agreement without deduction or withholding of any U.S. federal income taxes and
(B) in the case of a Form W-8 or W-9, that it is entitled to an exemption from
U.S. backup withholding tax.

          (c) In addition, the Borrower agrees to pay any present or future
stamp, documentary, privilege, intangible or similar Taxes or any other excise
or property Taxes, charges or similar levies that arise at any time or from time
to time (other than Excluded Taxes) (i) from any payment made under any and all
Credit Documents, (ii) from the transfer of the rights of any Lender under any
Credit Documents to any other Lender or Lenders or (iii) from the execution or
delivery by the Borrower of, or from the filing or recording or maintenance of,
or otherwise with respect to, any and all Credit Documents (hereinafter referred
to as "Other Taxes").

          (d) The Borrower will indemnify each Lender and the Agent for the full
amount of Taxes (including, without limitation and without duplication, any
Taxes imposed by any jurisdiction on amounts payable under this Section 2.7),
                                                                -----------
subject to (i) the exclusion set out in the first sentence of Section 2.7(a),
                                                              -------------
(ii) the provisions of Section 2.7(b), and (iii) the provisions of the proviso
                       -------------
set forth in Section 2.7(a), and will indemnify each Lender and the Agent for
             -------------
the full amount of Other Taxes (including, without limitation and without
duplication, any Taxes imposed by any jurisdiction on amounts payable under this
Section 2.7) paid by such Lender or the Agent (on its own behalf or on behalf of
-----------
any Lender), as the case may be, in respect of payments made or to be made
hereunder, and any liability (including penalties, interest and expenses)
arising solely therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. Payment of this indemnification
shall be made within thirty (30) days from the date such Lender or the Agent, as
the case may be, makes written demand therefor.

          (e) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes, the Borrower shall furnish to the Agent, at its address referred to
in Section 14.5, the original or certified copy of a receipt evidencing payment
   ------------
thereof.

                                       44
<PAGE>

          (f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.7 shall survive the payment in full of all Obligations hereunder
     -----------
and under the Revolving Notes.

     2.8 Sharing of Payments.
         -------------------

          If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of setoff or otherwise) on
account of the Loans made by it or its participation in Letters of Credit in
excess of its pro rata share of such payment as provided for in this Credit
Agreement, such Lender shall forthwith purchase from the other Lenders such
participations in the Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share the excess
payment accruing to all Lenders in accordance with their respective ratable
shares as provided for in this Credit Agreement; provided, however, that if all
                                                 --------  -------
or any portion of such excess is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and each such Lender
shall repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender's ratable share (according
to the proportion of (i) the amount of such Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) or any interest or
other amount paid or payable by the purchasing Lender in respect to the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.8 may, to the
                                                   -----------
fullest extent permitted by law, exercise all of its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.

     2.9 Pro Rata Treatment.
         ------------------

          Each Loan, each payment or prepayment of principal of any Loan or
reimbursement obligations arising from drawings under Letters of Credit, each
payment of interest on the Loans, each payment of the Letter of Credit Fee, each
reduction of the Commitments and each conversion or extension of any Loan, shall
be allocated pro rata among the Lenders in accordance with the respective
principal amounts of their outstanding Loans and their participation interests
in the Letters of Credit; provided, however, that the foregoing fees payabl
                          --------  -------
hereunder to the Lenders shall be allocated to each Lender based on such
Lender's Pro Rata Share.

     2.10 Securitization.
          --------------

          The Borrower hereby acknowledges that the Lenders and any of their
Affiliates may sell or securitize the Obligations (a "Securitization") through
the pledge of the Obligations as collateral security for loans to such Lenders
or their Affiliates or through the sale of the Obligations or the issuance of
direct or indirect interests in the Obligations, which loans to such Lenders or
their Affiliates or direct or indirect interests will be rated by Moody's,
Standard & Poor's or one or more other rating agencies (the "Rating Agencies").
The Borrower shall cooperate reasonably with such Lenders and their Affiliates
to effect the Securitization including, without limitation, by (a) amending this
Agreement and the other Loan Documents, and executing such additional documents,
as reasonably requested by such Lenders, in connection

                                       45
<PAGE>

with the Securitization, provided that (i) any such amendment or additional
documentation does not impose material additional costs on the Borrower, (ii)
any such amendment or additional documentation does not materially adversely
affect the rights, or materially increase the obligations (including
administrative duties or reporting obligations), of the Borrower under the
Credit Documents or change or affect in a manner adverse to the Borrower the
financial terms of the Obligations, and (b) providing such information as may be
reasonably requested by such Lenders, in connection with the rating of the
Obligations or the Securitization, (c) providing in connection with any rating
of the Obligations, a certificate (i) agreeing to indemnify such Lenders and any
of their Affiliates, any of the Rating Agencies, or any party providing credit
support or otherwise participating in the Securitization (collectively, the
"Securitization Parties") for any losses, claims, damages or liabilities (the
"Liabilities") to which such Lenders, their Affiliates or such Securitization
Parties may become subject insofar as the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Credit Document or in any writing delivered by or on behalf of
the Borrower and its respective Affiliates to the Agent or one or more Lenders
in connection with any Credit Document or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and such indemnity
shall survive any transfer by such Lenders or their successors or assigns of the
Obligations, and (ii) agreeing to reimburse such Lenders and any of their
Affiliates and other Securitization Parties for any legal or other expenses
reasonably incurred by such Persons in connection with defending the
Liabilities; and (d) providing such information regarding the Borrower, the
Guarantors, the Collateral and other property, assets and business of the
Borrower and the Guarantors (including appraisals and valuations) as may be
reasonably requested by such Lenders or their successors or assignees.

                                  ARTICLE III.

                                LETTERS OF CREDIT

     3.1 Issuance.
         --------

          Subject to the terms and conditions hereof and of the Letter of Credit
Documents, if any, and any other terms and conditions which the Issuing Bank may
reasonably require, the Lenders will participate in the issuance by the Issuing
Bank to the Underlying Issuer from time to time of one or more L/C Undertakings
with respect to Letters of Credit issued from time to time by the Underlying
Issuer in Dollars from the Original Closing Date until the Maturity Date as the
Borrower may request, in each case in a form acceptable to the Issuing Bank;
provided, however, that (a) the Letter of Credit Obligations outstanding shall
--------  -------
not at any time exceed THIRTY MILLION DOLLARS ($30,000,000) (the "Letter of
Credit Committed Amount") and (b) the sum of the aggregate principal amount of
outstanding Revolving Loans plus Letter of Credit Obligations outstanding shall
not at any time exceed the Revolving Credit Borrowing Base. No Letter of Credit
shall (x) have an original expiry date more than one year from the date of
issuance or (y) as originally issued or as extended, have an expiry date
extending beyond the Maturity Date. Each Letter of Credit shall comply with the
related Letter of Credit Documents. The issuance and expiry date of each Letter
of Credit shall comply with the related Letter of Credit Documents. The issuance
and expiry date of each Letter of Credit shall be a Business

                                       46
<PAGE>

Day. Notwithstanding anything to the contrary herein or otherwise, no Letter of
Credit shall be issued to or for the benefit of CBII (or any Person in its
capacity as a creditor of CBII) or to support, replace or supplement any
obligation of CBII, except for those Letters of Credit set forth in Schedule 3.1
                                                                    ------------
hereto.

     3.2 Notice and Reports.
         ------------------

          The request for the issuance of a Letter of Credit shall be submitted
by the Borrower to the Issuing Bank at least three (3) Business Days prior to
the requested date of issuance. The Issuing Bank will, upon request, disseminate
to each of the Lenders a detailed report specifying the Letters of Credit which
are then issued and outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and including therein, among
other things, the beneficiary, the face amount and the expiry date as well as
any payment or expirations which may have occurred.

     3.3 Participation.
         -------------

          Each Lender, upon issuance of a Letter of Credit, shall be deemed to
have purchased without recourse a risk participation from the Issuing Bank in
the applicable L/C Undertaking and the Issuing Bank's rights with respect to
such Letter of Credit and the obligations arising thereunder, in each case in an
amount equal to its Pro Rata Share of such Letter of Credit, and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the Issuing Bank therefor and discharge
when due, its Pro Rata Share of the obligations arising under such L/C
Undertaking. Without limiting the scope and nature of each Lender's
participation in any L/C Undertaking, to the extent that the Issuing Bank has
not been reimbursed as required hereunder, each such Lender shall pay to the
Issuing Bank its Pro Rata Share of such unreimbursed drawing pursuant to the
provisions of Section 3.4. The obligation of each Lender to so reimburse the
              -----------
Issuing Bank shall be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to make a payment to the Issuing Bank as a result of
drawings under any Letter of Credit, together with interest as hereinafter
provided.

     3.4 Payment.
         -------

          In the event of any drawing under any Letter of Credit, the Issuing
Bank will, promptly upon receiving actual knowledge thereof, notify the
Borrower. Unless the Borrower shall immediately notify the Issuing Bank that the
Borrower intends to otherwise make a payment to the Issuing Bank in the amount
of such drawing as a result of such drawing, the Borrower shall be deemed to
have requested that the Lenders make a Revolving Loan in the amount of the
drawing as provided in Section 3.5 on the related Letter of Credit, the proceeds
                       -----------
of which will be used to satisfy the related obligations to the Issuing Bank.
The Borrower promises to make a payment to the Issuing Bank in an amount equal
to the amount of each drawing on a Letter of Credit on the day of drawing under
any Letter of Credit (either with the proceeds of a Revolving Loan obtained
hereunder or otherwise) in same day funds. If the Borrower shall fail to pay the
Issuing Bank as provided hereinabove, the amount of such payment which has not
been made to the Issuing Bank shall bear interest at a per annum rate equal to
the interest rate

                                       47
<PAGE>

applicable to Revolving Loans that are Prime Rate Loans. The Borrower's payment
obligations hereunder shall be absolute and unconditional under all
circumstances irrespective of any rights of setoff, counterclaim or defense to
payment the Borrower may claim or have against the Underlying Issuer, the
Issuing Bank, the Agent, the Lenders, the beneficiary of the Letter of Credit
drawn upon or any other Person, including without limitation any defense based
on any failure of the Borrower to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The Issuing
Bank will promptly notify the other Lenders of the amount of any payment owing
to the Issuing Bank as a result of a draw on a Letter of Credit that has not
been paid by the Borrower as provided above, and each Lender shall promptly pay
to the Agent for the account of the Issuing Bank in Dollars and in immediately
available funds, the amount of such Lender's Pro Rata Share of such amount. Such
payment shall be made on the Business Day such notice is received by such Lender
from the Issuing Bank if such notice is received at or before 2:00 p.m.
otherwise such payment shall be made at or before 12:00 Noon on the Business Day
next succeeding the day such notice is received. If such Lender does not pay
such amount to the Issuing Bank in full upon such request, such Lender shall, on
demand, pay to the Agent for the account of the Issuing Bank interest on the
unpaid amount during the period from the date of such drawing until such Lender
pays such amount to the Issuing Bank in full at a rate per annum equal to, if
paid within two (2) Business Days of the date that such Lender is required to
make payments of such amount pursuant to the preceding sentence, the Federal
Funds Rate and thereafter at a rate equal to the Prime Rate. Each Lender's
obligation to make such payment to the Issuing Bank, and the right of the
Issuing Bank to receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to the termination
of this Credit Agreement or the Commitments hereunder, the existence of a
Default or Event of Default or the acceleration of the obligations of the
Borrower hereunder and shall be made without any offset, abatement, withholding
or reduction whatsoever. Simultaneously with the making of each such payment by
a Lender to the Issuing Bank, such Lender shall, automatically and without any
further action on the part of the Issuing Bank or such Lender, acquire a
participation in an amount equal to such payment (excluding the portion of such
payment constituting interest owing to the Issuing Bank) in the related
unreimbursed drawing portion of the Letter of Credit Obligation and in the
interest thereon and in the related Letter of Credit Documents, and shall have a
claim against the Borrower with respect thereto.

     3.5 Repayment with Revolving Loans.
         ------------------------------

          On any day on which the Borrower shall have requested, or been deemed
to have requested, a Revolving Loan advance to make a payment as a result of a
drawing under a Letter of Credit, the Agent shall give notice to the Lenders
that a Revolving Loan has been requested or deemed requested by the Borrower to
be made in connection with a drawing under a Letter of Credit, in which case a
Revolving Loan advance shall be immediately made to the Borrower by all Lenders
(notwithstanding any termination of the Commitments pursuant to Section 11.2)
                                                                ------------
pro rata based on the respective Pro Rata Shares of the Lenders (determined
before giving effect to any termination of the Commitments pursuant to Section
                                                                       -------
11.2) and the proceeds thereof shall be paid directly by the Agent to the
----
Issuing Bank for application to the respective Letter of Credit Obligations.
Each such Lender hereby irrevocably agrees to make its Pro Rata Share of each
such Revolving Loan immediately upon any such request or deemed request in the
amount, in the manner and on the date specified in the preceding sentence
notwithstanding (i) the amount of

                                       48
<PAGE>

such borrowing may not comply with the minimum amount for advances of Revolving
Loans otherwise required hereunder, (ii) whether any conditions specified in
Article V are then satisfied, (iii) whether a Default or an Event of Default
---------
then exists, (iv) failure for any such request or deemed request for Revolving
Loan to be made by the time otherwise required hereunder, (v) whether the date
of such borrowing is a date on which Revolving Loans are otherwise permitted to
be made hereunder or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the event that
any Revolving Loan cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
bankruptcy or insolvency proceeding with respect to the Borrower), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date such
borrowing would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase) from the
Issuing Bank such participation in the outstanding Letter of Credit Obligations
as shall be necessary to cause each such Lender to share in such Letter of
Credit Obligations ratably (based upon the respective Pro Rata Shares of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 11.2)), provided that at the time any purchase of
            ------------    --------
participation pursuant to this sentence is actually made, the purchasing Lender
shall be required to pay to the Issuing Bank, to the extent not paid to the
Issuing Bank by the Borrower in accordance with the terms of Section 3.4,
                                                             -----------
interest on the principal amount of participation purchased for each day from
and including the day upon which such borrowing would otherwise have occurred to
but excluding the date of payment for such participation, at the rate equal to,
if paid within two (2) Business Days of the date of the Revolving Loan advance,
the Federal Funds Rate, and thereafter at a rate equal to the Prime Rate.

     3.6 Renewal, Extension.
         ------- ----------

          The renewal or extension of any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new Letter of
Credit hereunder.

     3.7 Uniform Customs and Practices.
         -----------------------------

          The Issuing Bank or the Underlying Issuer may provide that the Letters
of Credit shall be subject to The Uniform Customs and Practice for Documentary
Credits, as published as of the date of issue by the International Chamber of
Commerce (the "UCP"), in which case the UCP may be incorporated by reference
therein and deemed in all respects to be a part thereof.

     3.8 Indemnification; Nature of Issuing Bank's Duties.
         ------------------------------------------------

          (a) In addition to their other obligations under this Article III, the
                                                                -----------
Borrower agrees to protect, indemnify, pay and save the Issuing Bank harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) that the
Issuing Bank may incur or be subject to as a consequence, direct or indirect, of
(A) the issuance of any Letter of Credit or any L/C Undertaking or (B) the
failure of the Underlying Issuer or the Issuing Bank to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority (all such acts or omissions, herein called "Government
Acts").

                                       49
<PAGE>

          (b) As between the Borrower and the Issuing Bank, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of Credit or any
L/C Undertaking by the beneficiary thereof. The Issuing Bank shall not be
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (iii) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (iv) for
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds thereof; and
(v) for any consequences arising from causes beyond the control of the Issuing
Bank, including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing Bank's rights or
powers hereunder.

          (c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Bank, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put such Issuing Bank
under any resulting liability to the Borrower. It is the intention of the
parties that this Credit Agreement shall be construed and applied to protect and
indemnify the Issuing Bank against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all Government Acts. The Issuing Bank
shall not, in any way, be liable for any failure by the Issuing Bank or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Bank.

          (d) Nothing in this Section 3.8 is intended to limit the reimbursement
                              -----------
obligations of the Borrower contained in Section 3.4 above. The obligations of
                                         -----------
the Borrower under this Section 3.8 shall survive the termination of this Credit
                        -----------
Agreement. No act or omission of any current or prior beneficiary of a Letter of
Credit shall in any way affect or impair the rights of the Issuing Bank to
enforce any right, power or benefit under this Credit Agreement.

          (e) Notwithstanding anything to the contrary contained in this Section
                                                                         -------
3.8, the Borrower shall have no obligation to indemnify the Issuing Bank in
---
respect of any liability incurred by the Issuing Bank arising solely out of the
gross negligence or willful misconduct of the Issuing Bank, as determined by a
court of competent jurisdiction.

     3.9 Responsibility of Issuing Bank.
         ------------------------------

          It is expressly understood and agreed that the obligations of the
Issuing Bank hereunder to the Lenders are only those expressly set forth in this
Credit Agreement and that the Issuing Bank shall be entitled to assume that the
conditions precedent set forth in Article III or V have been satisfied unless it
                                  -----------    -
shall have acquired actual knowledge that any such condition precedent has not
been satisfied; provided, however, that nothing set forth in this Article III
                --------  ------                                  -----------
shall be deemed to prejudice the right of any Lender to recover from the Issuing
Bank any amounts made available by such Lender to the Issuing Bank pursuant to
this Article III in the event that it
     -----------

                                       50
<PAGE>

is determined by a court of competent jurisdiction that the payment with respect
to a Letter of Credit constituted gross negligence or willful misconduct on the
part of the Issuing Bank.

     3.10 Conflict with Letter of Credit Documents.
          ---------------------------------------

          In the event of any conflict between this Credit Agreement and any
Letter of Credit Document (including any letter of credit application), this
Credit Agreement shall control.

                                  ARTICLE IV.

                                INTEREST AND FEES

     4.1 Interest on Loans.
         -----------------

          Subject to Section 4.8(a), interest on the Loans and other amounts
                     -------------
charged to the Loan Account shall accrue each day on the balance thereof, and
shall be payable monthly in arrears on the first day of each calendar month (for
the preceding month). Subject to the provisions of Section 4.2, the interest
                                                   -----------
rate (the "Interest Rate") with respect to (i) a LIBOR Rate Loan shall be equal
to the LIBOR Rate plus three and three-quarters percent (3.75%) and (ii) a Prime
Rate Loan shall be equal to a per annum rate equal to the Prime Rate plus one
percent (1%). The interest rate hereunder shall be calculated based on a 360 day
year for the actual number of days elapsed.

          The foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on any day on the daily balance thereof at a per annum
rate less than 6% (the "Minimum Rate"). To the extent that interest accrued
hereunder at the rate otherwise set forth herein would be less than the
foregoing minimum daily rate, the interest rate chargeable hereunder for such
day shall automatically be deemed increased to the Minimum Rate.

     4.2 Interest After Event of Default.
         -------------------------------

          Interest on the Loans and other amounts charged to the Loan Account,
as of the date an Event of Default occurs, and at all times thereafter until the
earlier of the date upon which (a) all Obligations have been paid and satisfied
in full in cash or (b) such Event of Default shall have been cured or waived,
shall be payable on demand at a rate equal to the Interest Rate plus two percent
(2%) per annum (the "Default Rate"). Interest shall be payable on any other
amount due hereunder and shall accrue at the Default Rate from the date due and
payable until paid in full. The rates hereunder shall be calculated based on a
360-day year for the actual number of days elapsed.

     4.3 [Intentionally Deleted]

     4.4 Agent's Fees.
         ------------

          The Borrower shall pay all fees required to be paid to the Agent under
the Fee Letter at the times and in the amounts set forth therein.

                                       51
<PAGE>

     4.5 Letter of Credit Fees.
         ---------------------

          (a) Letter of Credit Fee. In consideration of the issuance of Letters
              --------------------
of Credit hereunder, the Borrower promises to pay to the Agent for the account
of each Lender a fee (the "Letter of Credit Fee") on such Lender's Pro Rata
Share of the average daily maximum amount available to be drawn under each such
Letter of Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration equal to three percent (3%) per annum. The
Letter of Credit Fee will be payable in arrears on a monthly basis.

          (b) Issuing Bank Fees. In addition to the Letter of Credit Fee payable
              -----------------
pursuant to clause (a) above, the Borrower promises to pay to the Issuing Bank
for its own account without sharing by the other Lenders the letter of credit
fronting and negotiation fees agreed to by the Borrower and the Issuing Bank
from time to time and the customary charges from time to time of the Issuing
Bank with respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of Credit
(collectively, the "Issuing Bank Fees") and all fees or other amounts charged to
the Issuing Bank by the Underlying Issuer.

     4.6 Authorization to Charge Loan Account.
         ------------------------------------

          The Borrower hereby authorizes the Agent to charge the Loan Account
with the amount of all payments, fees and other amounts due hereunder or under
the Fee Letter to the Lenders, the Agent and the Issuing Bank as and when such
payments become due. The Borrower confirms that any charges which the Agent may
so make to the Borrower's accounts as herein provided will be made as an
accommodation to the Borrower and solely at the Agent's discretion.

     4.7 Indemnification in Certain Events.
         ---------------------------------

          If after the Original Closing Date, either (a) any change in or in the
interpretation of any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Foothill or any
other banking or financial institution from whom any of the Lenders borrow funds
or obtain credit (a "Funding Bank") or any of the Lenders, or (b) a Funding Bank
or any of the Lenders complies with any future guideline or request from any
central bank or other Governmental Authority or (c) a Funding Bank or any of the
Lenders determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or a Funding Bank or any
of the Lenders complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (c),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any of the Lenders' capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such adoption, change or compliance (taking into
consideration the Funding Bank's or Lenders' policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, and the result of
any of the foregoing events described in clauses (a), (b)

                                       52
<PAGE>

or (c) is or results in an increase in the cost to any of the Lenders of funding
or maintaining any Commitment, the Revolving Loans, the Term Loans or the
Letters of Credit, then the Borrower shall from time to time upon demand by the
Agent, pay to the Agent additional amounts sufficient to indemnify the Lenders
against such increased cost. A certificate as to the amount of such increased
cost shall be submitted to the Borrower by the Agent and shall be conclusive and
binding absent manifest error.

     4.8 LIBOR Option.
         ------------

          (a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Prime Rate, Borrower shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Revolving Loans
      ------------
or the Term Loan be charged at a rate of interest based upon the LIBOR Rate.
Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto, (ii) the occurrence of an Event
of Default in consequence of which the Required Lenders or Agent on behalf
thereof elect to accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Prime Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Revolving Loans or the Term Loan bear
interest at the LIBOR Rate and Agent shall have the right to convert the
interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to
Prime Rate Loans hereunder.

          (b)  LIBOR Election.

               (i)  Borrower may, at any time and from time to time, so long as
          no Event of Default has occurred and is continuing, elect to exercise
          the LIBOR Option by notifying Agent prior to 11:00 a.m. (California
          time) at least 3 Business Days prior to the commencement of the
          proposed Interest Period (the "LIBOR Deadline"). Notice of Borrower's
                                         --------------
          election of the LIBOR Option for a permitted portion of the Revolving
          Loans or the Term Loan and an Interest Period pursuant to this Section
          shall be made by delivery to Agent of a LIBOR Notice received by Agent
          before the LIBOR Deadline, or by telephonic notice received by Agent
          before the LIBOR Deadline (to be confirmed by delivery to Agent of a
          LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on
          the same day. Promptly upon its receipt of each such LIBOR Notice,
          Agent shall provide a copy thereof to each of the Lenders having a
          Revolving Credit Committed Amount.

               (ii) Each LIBOR Notice shall be irrevocable and binding on
          Borrower. In connection with each LIBOR Rate Loan, Borrower shall
          indemnify, defend, and hold Agent and the Lenders harmless against any
          loss, cost, or expense incurred by Agent or any Lender as a result of
          (a) the payment of any principal of any LIBOR Rate Loan other than on
          the last day of an Interest Period applicable thereto (including as a
          result of an Event of Default), (b) the conversion of any LIBOR Rate
          Loan other than on the last day of the Interest Period applicable
          thereto, or (c) the failure to borrow, convert, continue or

                                       53
<PAGE>

          prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice
          delivered pursuant hereto (such losses, costs, and expenses,
          collectively, "Funding Losses"). Funding Losses shall, with respect to
                         --------------
          Agent or any Lender, be deemed to equal the amount determined by Agent
          or such Lender to be the excess, if any, of (i) the amount of interest
          that would have accrued on the principal amount of such LIBOR Rate
          Loan had such event not occurred, at the LIBOR Rate that would have
          been applicable thereto, for the period from the date of such event to
          the last day of the then current Interest Period therefor (or, in the
          case of a failure to borrow, convert, or continue, for the period that
          would have been the Interest Period therefor), minus (ii) the amount
          of interest that would accrue on such principal amount for such period
          at the interest rate which Agent or such Lender would be offered were
          it to be offered, at the commencement of such period, for Dollar
          deposits of a comparable amount and period in the London interbank
          market. A certificate of Agent or a Lender delivered to Borrower
          setting forth any amount or amounts that Agent or such Lender is
          entitled to receive pursuant to this Section shall be conclusive
          absent manifest error.

               (iii) Borrower shall have not more than five (5) LIBOR Rate Loans
          in effect at any given time. Borrower only may exercise the LIBOR
          Option for LIBOR Rate Loans of at least $1,000,000 and integral
          multiples of $500,000 in excess thereof.

          (c) Prepayments. Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
--------  -------
date that is not the last day of the Interest Period applicable thereto,
including as a result of any mandatory prepayment in accordance with Section
                                                                      ------
2.3(b) or for any other reason, including early termination of the term of this
-----
Credit Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, Borrower shall indemnify, defend, and hold Agent
and the Lenders and their Participants harmless against any and all Funding
Losses in accordance with clause (b)(ii) above; provided, however that if any
                                                -------- --------
prepayment would prepay a LIBOR Rate Loan, the Borrower may elect to either
prepay such Loan at such time or have the Agent hold any such prepayment amount
as cash collateral until the end of the Interest Period applicable to such LIBOR
Rate Loan. All amounts held by the Agent as cash collateral pursuant to this
Section 4.8(c) and not yet applied to prepay Loans shall bear interest for the
-------------
account of the Borrower at a rate equal to the Federal Funds Rate. All such
interest shall be treated as a portion of the original amount held as cash
collateral by the Agent and shall be applied to prepay LIBOR Rate Loans, if
applicable, in accordance with this Section 4.8(c).
                                    -------------

          (d)  Special Provisions Applicable to LIBOR Rate.

               (i)   The LIBOR Rate may be adjusted by Agent with respect to any
          Lender on a prospective basis to take into account any additional or
          increased costs to such Lender of maintaining or obtaining any
          eurodollar deposits or increased costs due to changes in applicable
          law occurring subsequent to the commencement of the then applicable
          Interest Period, including changes in tax laws (except changes of
          general applicability in corporate income tax laws) and changes in the
          reserve requirements imposed by the Board of Governors of the Federal
          Reserve System (or any successor), excluding the Reserve Percentage,
          which additional or increased costs would increase the cost of funding
          loans bearing interest at the LIBOR Rate. In any such event, the
          affected

                                       54
<PAGE>

          Lender shall give Borrower and Agent notice of such a determination
          and adjustment and Agent promptly shall transmit the notice to each
          other Lender and, upon its receipt of the notice from the affected
          Lender, Borrower may, by notice to such affected Lender (y) require
          such Lender to furnish to Borrower a statement setting forth the basis
          for adjusting such LIBOR Rate and the method for determining the
          amount of such adjustment, or (z) repay the LIBOR Rate Loans with
          respect to which such adjustment is made (together with any amounts
          due under clause (b)(ii) above).

               (ii) In the event that any change in market conditions or any
          law, regulation, treaty, or directive, or any change therein or in the
          interpretation or application thereof, shall at any time after the
          date hereof, in the reasonable opinion of any Lender, make it unlawful
          or impractical for such Lender to fund or maintain LIBOR Rate Loans or
          to continue such funding or maintaining, or to determine or charge
          interest rates at the LIBOR Rate, such Lender shall give notice of
          such changed circumstances to Agent and Borrower and Agent promptly
          shall transmit the notice to each other Lender and (y) in the case of
          any LIBOR Rate Loans of such Lender that are outstanding, the date
          specified in such Lender's notice shall be deemed to be the last day
          of the Interest Period of such LIBOR Rate Loans, and interest upon the
          LIBOR Rate Loans of such Lender thereafter shall accrue interest at
          the rate then applicable to Prime Rate Loans, and (z) Borrower shall
          not be entitled to elect the LIBOR Option until such Lender determines
          that it would no longer be unlawful or impractical to do so.

          (e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.

                                   ARTICLE V.

                              CONDITIONS PRECEDENT

          The obligation of the Lenders to make the Term Loans or any Revolving
Loan or of the Issuing Bank to issue any Letter of Credit hereunder is subject
to the satisfaction of, or waiver of, immediately prior to or concurrently with
the making of such Term Loans or any Revolving Loan or issuance of such Letter
of Credit the following conditions precedent:

     5.1 Original Closing Date Conditions.
         --------------------------------

          The obligation of each Lender to make Loans and/or of the Issuing Bank
to issue Letters of Credit under the Original Credit Agreement was subject to
the satisfaction, on or prior to the Original Closing Date, of the following
conditions precedent (all of which were either satisfied or waived):

                                       55
<PAGE>

          (a) Executed Credit Documents. Receipt by the Agent of duly executed
              -------------------------
copies of: the Original Credit Agreement; the Notes issued pursuant to the
Original Credit Agreement; the Security Documents and the Guarantees; and all
other Credit Documents, and each other agreement, document, certificate or
instrument described on the Closing Checklist attached to the Original Credit
Agreement as Exhibit K, each in form and substance acceptable to the Agent and
             ---------
the Lenders in their sole discretion.

          (b) Corporate Documents. Receipt by the Agent of the following:
              -------------------

               (i) Charter Documents. Copies of the articles or certificates of
                   -----------------
          incorporation or formation or other charter documents of each Credit
          Party certified, to the extent available, to be true and complete as
          of a recent date by the appropriate Governmental Authority of the
          state or other jurisdiction of its incorporation or formation and
          certified by a secretary or assistant secretary of such Credit Party
          to be true and correct as of the Original Closing Date.

               (ii) Bylaws. A copy of the bylaws or limited liability company
                    ------
          agreement or similar agreement of each Credit Party certified by a
          secretary or assistant secretary of such Credit Party to be true and
          correct as of the Original Closing Date.

               (iii) Resolutions. Copies of resolutions of the Board of
                     -----------
          Directors or similar managing body of each Credit Party approving and
          adopting the Credit Documents to which it is a party, the transactions
          contemplated therein and authorizing execution and delivery thereof,
          certified by a secretary or assistant secretary of such Credit Party
          to be true and correct and in force and effect as of the Original
          Closing Date.

               (iv) Good Standing. Copies of (i) certificates of good standing,
                    -------------
          existence or its equivalent with respect to each Credit Party
          certified as of a recent date by the appropriate Governmental
          Authorities of the state or other jurisdiction of incorporation and
          each other jurisdiction in which the failure to so qualify and be in
          good standing could reasonably be expected to have a Material Adverse
          Effect and (ii) to the extent available, a certificate indicating
          payment of all corporate franchise taxes certified as of a recent date
          by the appropriate taxing Governmental Authorities.

               (v) Incumbency. An incumbency certificate of each Credit Party
                   ----------
          certified by a secretary or assistant secretary to be true and correct
          as of the Original Closing Date.

          (c) Financial Statements. Receipt by the Agent and the Lenders of the
              --------------------
unaudited balance sheet of the Borrower as of, and a statement of income for the
period ending, September 30, 2000 prepared by the chief accounting officer of
the Borrower and such other information relating to the Borrower Entities as the
Agent may reasonably require in connection with the structuring and syndication
of credit facilities of the type described herein.

          (d) Opinions of Counsel. Receipt by the Agent of an opinion, or
              -------------------
opinions (which covered, among other things, authority, legality, validity,
binding effect, enforceability and attachment and perfection of liens)
satisfactory to the Agent, addressed to the Agent and the

                                       56
<PAGE>

Lenders and dated the Original Closing Date, from legal counsel to the Borrower
and the relevant Subsidiaries.

          (e)  Collateral. The Agent shall have received:
               ----------

               (i)   searches of Uniform Commercial Code, PPSA or other similar
          filings in the jurisdiction of the chief executive office of each
          Secured Credit Party and each jurisdiction where any Collateral is
          located or where a filing would need to be made in order to perfect
          the Agent's security interest in the Collateral, copies of the
          financing statements on file in such jurisdictions and evidence that
          no Liens exist other than Permitted Liens;

               (ii)  duly executed UCC, PPSA or other similar financing
          statements for each appropriate jurisdiction as is necessary, in the
          Agent's sole discretion, to perfect the Agent's security interest in
          the Collateral;

               (iii) searches of ownership of intellectual property in the
          appropriate governmental offices and such patent/trademark/copyright
          filings as requested by the Agent in order to perfect the Agent's
          security interest in the Collateral;

               (iv)  all instruments and chattel paper in the possession of the
          Borrower, together with allonges or assignments as may be necessary or
          appropriate to perfect the Agent's security interest in the Collateral
          to the extent required under the Security Agreement;

               (v)   duly executed consents as are necessary, in the Agent's
          sole discretion, to perfect the Agent's security interest in the
          Collateral, including, without limitation, such Acknowledgment
          Agreements as the Agent may require;

               (vi)  duly executed tri-party agreements in form and substance
          acceptable to the Agent with respect to each bank account of the
          Borrower (other than payroll and petty cash bank accounts maintained
          as zero balance accounts and other similar bank accounts having
          limited or no activity and balances of not more than $10,000 and
          disbursement accounts and investment accounts acceptable to the
          Agent); and

               (vii) duly executed mortgages on the real property which is owned
          by CBCNA.

          (f) Priority of Liens. The Agent shall have received satisfactory
              -----------------
evidence that the Agent, on behalf of the Lenders, holds a perfected, first
priority Lien on all Collateral (subject only to Permitted Liens).

          (g) Opening Revolving Credit Borrowing Base Certificate. The Agent and
              ---------------------------------------------------
the Borrower shall have agreed upon Revolving Credit Borrowing Base calculation
and reporting procedures and the Agent shall have received a Revolving Credit
Borrowing Base Certificate as of March 7, 2001, substantially in the form of
Exhibit G and certified by the chief accounting
---------

                                       57
<PAGE>

officer or treasurer of the Borrower on the Original Closing Date to be true and
correct as of February 24, 2001.

          (h)  [intentionally deleted]

          (i)  [intentionally deleted]

          (j) Evidence of Insurance. Receipt by the Agent of copies of insurance
              ---------------------
policies or certificates of insurance of the Borrower and it Subsidiaries
evidencing liability and casualty insurance meeting the requirements set forth
in the Credit Documents, including, without limitation, naming the Agent as loss
payee on behalf of the Lenders and as additional insured to the extent required
by Section 7.10.
   ------------

          (k) Corporate Structure. The corporate capital and ownership structure
              -------------------
of the Borrower and its Subsidiaries shall be as described in Schedule 6.9.
                                                              ------------

          (l) Consents. Receipt by the Agent of evidence that all governmental,
              --------
shareholder and third party consents and approvals required in connection with
the transactions and the related financings contemplated hereby and expiration
of all applicable waiting periods without any action being taken by any
authority that could restrain, prevent or impose any material adverse conditions
on such transactions or that could seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the judgment of the Agent could
have such effect.

          (m) Litigation. There shall not exist any pending or threatened
              ----------
action, suit, investigation or proceeding against the Borrower or any of its
Subsidiaries or its assets that could reasonably be expected to have a Material
Adverse Effect.

          (n) Other Indebtedness. Receipt by the Agent of evidence that, after
              ------------------
giving effect to the making of the Loans made on the Original Closing Date, the
Borrower and its Subsidiaries shall have no Funded Indebtedness other than the
Indebtedness under the Credit Documents and as disclosed on Schedule 1.1D.
                                                            -------------

          (o) Solvency Certificate. Receipt by the Agent of an officer's
              --------------------
certificate for the Borrower prepared by its chief accounting officer or
treasurer as to the financial condition, solvency and related matters of the
Borrower, in each case after giving effect to the initial borrowings under the
Credit Documents, in substantially the form of Exhibit H hereto.
                                               ---------

          (p) Officer's Certificates. The Agent shall have received a
              ----------------------
certificate or certificates executed by the president or chief accounting
officer or treasurer of the Borrower as of the Original Closing Date stating
that (i) after giving effect to the making of the Loans and application of the
proceeds thereof, the Borrower is in compliance with all existing financial
obligations, (ii) all governmental, shareholder and third party consents and
approvals, if any, with respect to the Credit Documents and the transactions
contemplated thereby have been obtained, (iii) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Borrower or any
transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could reasonably be expected to have a Material
Adverse Effect and (iv) immediately

                                       58
<PAGE>

after giving effect to this Credit Agreement, the other Credit Documents and all
the transactions contemplated therein to occur on such date, (A) the Borrower is
Solvent, (B) no Default or Event of Default exists, (C) all representations and
warranties contained herein and in the other Credit Documents are true and
correct in all material respects, and (D) the Borrower is in compliance with
each of the financial covenants set forth in Article VIII.
                                             ------------

          (q) Fees and Expenses. Payment by the Borrower of all fees and
              -----------------
expenses owed by it to the Lenders and the Agent, including, without limitation,
payment to the Agent of the fees set forth in the Fee Letter.

          (r) Sources and Uses; Payment Instructions. Receipt by the Agent of
              --------------------------------------
(a) a statement of sources and uses of funds covering all payments reasonably
expected to be made by the Borrower in connection with the transactions
contemplated by the Credit Documents to be consummated on the Original Closing
Date, including an itemized estimate of all fees, expenses and other closing
costs and (b) payment instructions with respect to each wire transfer to be made
by the Agent on behalf of the Lenders or the Borrower on the Original Closing
Date setting forth the amount of such transfer, the purpose of such transfer,
the name and number of the account to which such transfer is to be made, the
name and ABA number of the bank or other financial institution where such
account is located and the name and telephone number of an individual that can
be contacted to confirm receipt of such transfer.

          (s) Account Designation Letter. Receipt by the Agent of an Account
             ---------------------------
Designation Letter substantially in the form of Exhibit I hereto.
                                                ---------

          (t) Material Adverse Change. (i) No material adverse change in the
              -----------------------
business, operations, profits or prospects of the Borrower and its Subsidiaries,
taken as a whole, shall have occurred since September 30, 2000 and (ii) on or
prior to the Original Closing Date, there shall not have occurred a substantial
impairment of the financial markets generally which, in the opinion of the
Lenders, has materially and adversely affected the transactions contemplated
hereby.

          (u) Availability. The Lenders shall be satisfied that, after reserving
              ------------
for amounts to bring the current liabilities of the Borrower within their terms
(and after giving effect to payments made to comply with item (r) above), the
sum of (a) Availability plus (ii) the unrestricted cash and Cash Equivalents
then held or owned directly by the Borrower, shall be equal to at least
$40,000,000.

          (v) PACA. The Agent shall have received evidence satisfactory to the
              ----
Agent that all contracts between the Borrower and any of its Subsidiaries that
are subject to the benefits of PACA have payment terms of at least thirty-one
(31) days and include language necessary to exclude the underlying sales
transactions from the benefits of PACA.

          (w) Subordination. The Agent shall have received evidence satisfactory
              -------------
to the Agent that (i) either (A) all obligations (other than obligations in an
aggregate principal amount not to exceed $40,000,000, which are evidenced by a
note in form and substance acceptable to the Agent, and other than amounts
accruing after January 1, 2001 relating to amounts owing with respect to
overhead or tax sharing agreements) of the Borrower or any of its Subsidiaries
owing

                                       59
<PAGE>

to CBII have been converted into equity or (B) all claims of and amounts, now or
in the future, owing by the Borrower or any of its Subsidiaries to the Borrower
or any of its Subsidiaries are subordinated to the Obligations, and (ii) all
claims of, and amounts now or in the future owing by the Borrower by any of its
Subsidiaries to CBII are subordinated to the Obligations.

          (x) Sales Agent. The Agent shall have received evidence satisfactory
              -----------
to the Agent that (i) CBCNA is the agent of the Borrower for the sale of
bananas, plantains and other items in the United States and that all money
received by CBCNA in connection with such sales is received for the benefit of,
and is the property of, the Borrower, (ii) CBCNA is no longer the agent of, and
no longer collects any funds for or on behalf of, CBII, (iii) Chiquita (Canada)
Inc. is the agent of the Borrower for the sale of bananas, plantains and other
items in Canada and that all money received by Chiquita (Canada) Inc. in
connection with such sales is received for the benefit of, and is the property
of, the Borrower and (iv) Chiquita (Canada) Inc. is no longer the agent of, and
no longer collects any funds for or on behalf of, CBII.

          (y) Other. Receipt by the Lenders of such other documents,
              -----
instruments, agreements or information as reasonably requested by any Lender,
including, without limitation, information regarding litigation, tax,
accounting, labor, insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property ownership and
contingent liabilities of the Borrower.

          (z) The Agent shall have received copies, certified by an officer of
the Borrower as being true, correct, complete and in full force and effect and
not modified, of each of the following documents:

               (i)   that certain License Agreement dated as of December 31,
          2000 by and between the Borrower and CBII;

               (ii)  that certain Banana Supply Agreement made effective as of
          December 31, 2000 by and between CIL and the Borrower;

               (iii) that certain Business Assignment Agreement made effective
          as of December 31, 2000 by and between CBII and the Borrower;

               (iv)  that certain U.S. Sale of Fruit Commission Sales Agreement
          dated effective as of December 31, 2000 by and between the Borrower
          and CBCNA;

               (v)   that certain Canadian Sale of Fruit Commission Sales
          Agreement dated effective as of December 31, 2000 by and between the
          Borrower and Chiquita (Canada) Inc.;

               (vi)  that certain Waiver dated as of December 31, 2000 by and
          between CIL and the Borrower; and

               (vii) that certain Subordinated Promissory Note dated December
          31, 2000 made by the Borrower in favor of CBII in an original
          principal amount equal to $40,000,000.

                                       60
<PAGE>

     5.2  Closing Conditions.
          ------------------

          The obligation of each Lender to make Loans and/or of the Issuing Bank
to issue Letters of Credit under this Credit Agreement is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
precedent:

          (a) Executed Credit Documents. Receipt by the Agent of duly executed
              -------------------------
copies of this Credit Agreement, the Notes, all other Credit Documents amended
or otherwise modified or executed in connection with the transactions
contemplated by this Credit Agreement, and each other agreement, document,
certificate or instrument described on the Closing Checklist attached hereto as
Exhibit K, each in form and substance acceptable to the Agent and the Lenders in
---------
their reasonable judgment.

          (b) Corporate Documents. Receipt by the Agent of a certificate of a
              -------------------
secretary or assistance secretary of each Secured Credit Party certifying that
as of the Closing Date the following statements are true and correct or
attaching the following, as applicable.

               (i)   Charter Documents. The articles or certificates of
                     -----------------
          incorporation or formation or other charter documents of each Secured
          Credit Party have not been amended after the Original Closing Date.

               (ii)  Bylaws. The bylaws or limited liability company agreement
                     ------
          or similar agreement of each Secured Credit Party has not been amended
          after the Original Closing Date.

               (iii) Resolutions. Copies of resolutions of the Board of
                     -----------
          Directors or similar managing body of each Credit Party approving, in
          the case of the Borrower, the Credit Agreement and, in the case of the
          other Credit Parties, the transactions contemplated by the Credit
          Agreement and, in the case of the Borrower, authorizing execution and
          delivery thereof, and in the case of the other Credit Parties,
          acknowledging and reaffirming the Credit Documents to which such other
          Credit Party is a party.

          (c) Opinions of Counsel. Receipt by the Agent of an opinion, or
              -------------------
opinions (which shall cover, among other things, authority, legality, validity,
binding effect, enforceability) satisfactory to the Agent, addressed to the
Agent and the Lenders and dated the Closing Date, from legal counsel to the
Borrower.

          (d) Officer's Certificates. The Agent shall have received a
              ----------------------
certificate or certificates executed by the president or chief accounting
officer or treasurer of the Borrower as of the Closing Date stating that (i)
after giving effect to the making of the Loans and application of the proceeds
thereof, the Borrower is in compliance with all existing financial obligations,
(ii) all governmental, shareholder and third party consents and approvals, if
any, with respect to the Credit Documents and the transactions contemplated
thereby have been obtained, (iii) except as disclosed to the Agent in writing by
the Borrower, no action, suit, investigation or proceeding is pending or
threatened in any court or before any arbitrator or governmental instrumentality
that purports to affect the Borrower or any transaction contemplated by the
Credit Documents, if such action, suit, investigation or proceeding could
reasonably be expected to have a Material Adverse Effect and (iv) immediately
after giving effect to this Credit Agreement, the other Credit

                                       61
<PAGE>

Documents and all the transactions contemplated herein or therein to occur on
such date, (A) the Borrower is Solvent, (B) no Default or Event of Default
exists, (C) all representations and warranties contained herein and in the other
Credit Documents are true and correct in all material respects, and (D) the
Borrower is in compliance with each of the financial covenants set forth in
Article VIII.
------------

          (e) Fees and Expenses. Payment by the Borrower of all fees and
              -----------------
expenses owed by it to the Lenders and the Agent, including, without limitation,
payment to the Agent of the fees set forth in the Fee Letter.

          (f) Material Adverse Change. (i) No material adverse change in the
              -----------------------
business, operations, profits or prospects of the Borrower and its Subsidiaries,
taken as a whole, shall have occurred since September 30, 2001 and (ii) on or
prior to the Closing Date, there shall not have occurred a substantial
impairment of the financial markets generally which, in the opinion of the
Lenders, has materially and adversely affected the transactions contemplated
hereby.

          (g) Availability. The Lenders shall be satisfied that, after reserving
              ------------
for amounts to bring the current liabilities of the Borrower within their terms,
the sum of (i) Availability (without giving effect to the Resolution Block),
plus (ii) the Borrower's and its Subsidiaries' (other than any Excluded
Entity's) unrestricted cash and Cash Equivalents shall be equal to at least
$65,000,000.

          (h) Updated Appraisal. Receipt and approval by the Lenders of an
              -----------------
updated appraisal by Daley-Hodkin Appraisal Corporation confirming that the
assessment of values contained in the Appraisal is not less than the levels
stated in the Appraisal.

          (i) Fee Side Letter. The Lenders and the Borrower shall have agreed to
              ---------------
and executed a mutually agreeable letter outlining the expectations regarding
additional fees for future amendments and waivers.

          (j) Review of Books and Records. Satisfactory review by the Lenders of
              ---------------------------
Borrower's books, records and operating projections performed by a third party.

          (k) Other. Receipt by the Lenders of such other documents,
              -----
instruments, agreements or information as reasonably requested by any Lender,
including, without limitation, information regarding litigation, tax,
accounting, labor, insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property ownership and
contingent liabilities of the Borrower.

     5.3  Conditions to all Loans and Letters of Credit.
          ---------------------------------------------

          (a) On the date of the making of any Term Loan, Revolving Loan or the
issuance of any Letter of Credit, both before and after giving effect thereto
and to the application of the proceeds therefrom, the following statements shall
be true in the reasonable judgment of the Agent (and each request for a Term
Loan, a Revolving Loan and request for a Letter of Credit, and the acceptance by
the Borrower of the proceeds of such Term Loan, Revolving Loan or issuance of
such Letter of Credit, shall constitute a representation and warranty by the
Borrower that on the date of such Term Loan, Revolving Loan or issuance of such
Letter of

                                       62
<PAGE>

Credit before and after giving effect thereto and to the application of the
proceeds therefrom, such statements are true):

               (i)   the representations and warranties contained in the Credit
          Documents are true and correct in all material respects on and as of
          the date of such Term Loan, Revolving Loan or issuance of such Letter
          of Credit as though made on and as of such date, except to the extent
          that such representations and warranties expressly relate solely to an
          earlier date (in which case such representations and warranties shall
          have been true and complete on and as of such earlier date);

               (ii)  no event has occurred and is continuing, or would result
          from such Term Loan, Revolving Loan or issuance of such Letter of
          Credit or the application of the proceeds thereof, which would
          constitute a Default or an Event of Default under this Credit
          Agreement; and

               (iii) No material adverse change in the business, operations,
          profits or prospects of the Borrower and its Subsidiaries, taken as a
          whole, shall have occurred since September 30, 2001.

          (b) In connection with the making of any Revolving Loan or Term Loan,
the Agent shall have received a Notice of Borrowing to the extent such Notice of
Borrowing is required to be given with respect to the making of such Revolving
Loan or Term Loan.

                                  ARTICLE VI.

                         REPRESENTATIONS AND WARRANTIES

          In order to induce the Lenders to enter into this Credit Agreement and
the Issuing Bank to issue the Letters of Credit, and to make available the
credit facilities contemplated hereby, the Borrower hereby represents and
warrants to the Lenders and the Issuing Bank as of the Closing Date and on the
date of each extension of credit hereunder, as follows:

     6.1  Organization and Qualification.
          ------------------------------

          The Borrower and each of its Subsidiaries (i) is a limited liability
company, corporation or entity duly organized, validly existing and in good
standing under the laws of the state of its jurisdiction or organization, (ii)
has the power and authority to own its properties and assets and to transact the
businesses in which it is presently, or proposes to be, engaged, and (iii) is
duly qualified and is authorized to do business and is in good standing in every
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect. Schedule 6.1 contains a true,
                                            ------------
correct and complete list of all jurisdictions in which each Secured Credit
Party is qualified to do business as a foreign corporation or foreign limited
liability company as of the Closing Date.

     6.2  Solvency.
          --------

          The Borrower is Solvent.

                                       63
<PAGE>

     6.3  Liens; Inventory.
          ----------------

          There are no Liens in favor of third parties with respect to any of
the Collateral, other than Permitted Liens. Upon the proper filing of financing
statements and the proper recordation of other applicable documents with the
appropriate filing or recordation offices in each of the necessary
jurisdictions, the security interests granted pursuant to the Credit Documents
constitute and shall at all times constitute valid and enforceable and, with
respect to assets in which a security interest can be perfected by filing,
first, prior and perfected Liens on the Collateral (other than Permitted Liens).
The Borrower or the relevant Subsidiary, as applicable, is or will be at the
time additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, consign, transfer and create a Lien
therein, free and clear of any and all Liens in favor of third parties, except
Permitted Liens. The Borrower and each of its Subsidiaries which is a party to a
Security Document will at its expense warrant, until payment in full of the
Obligations and termination of the Commitments, and, at the Agent's request,
defend the Collateral from any and all Liens (other than Permitted Liens) of any
third party.

     6.4  No Conflict.
          -----------

          The execution and delivery by each of the Borrower Entities of this
Credit Agreement and each of the other Credit Documents executed and delivered
in connection herewith by one or more of the Borrower Entities (other than the
documents required to be delivered in order to reduce the amount of the
Resolution Block; provided, that from and after the date of receipt of all such
documents, the representation and warranty contained in this Section shall
apply) and the performance of the obligations of such Borrower Entities
hereunder and thereunder and the consummation by such Borrower Entities of the
transactions contemplated hereby and thereby: (i) are within the corporate or
limited liability company powers of such Borrower Entity; (ii) are duly
authorized by the Board of Directors or similar managing body of such Borrower
Entity; (iii) are not in contravention of the terms of the organizational
documents of such Borrower Entity or of any indenture, contract, lease,
agreement, instrument or other commitment to which such Borrower Entity is a
party or by which such Borrower Entity or any of its properties are bound; (iv)
do not require the consent, registration or approval of any Governmental
Authority or any other Person (except such as have been duly obtained, made or
given, and are in full force and effect); (v) do not contravene any statute,
law, ordinance, regulation, rule, order or other governmental restriction
applicable to or binding upon such Borrower Entity; and (vi) will not, except as
contemplated herein for the benefit of the Agent on behalf of the Lenders,
result in the imposition of any Liens upon any property of such Borrower Entity
under any existing indenture, mortgage, deed of trust, loan or credit agreement
or other material agreement or instrument to which such Borrower Entity is a
party or by which it or any of its property may be bound or affected.

     6.5  Enforceability.
          --------------

          The Credit Agreement and all of the other Credit Documents executed
and delivered by the Borrower are the legal, valid and binding obligations of
the Borrower, and with respect to those Credit Documents executed and delivered
by any of its Subsidiaries, of each such Subsidiary, and are enforceable against
the Borrower and such Subsidiaries, as the case may

                                       64
<PAGE>

be, in accordance with their terms except as such enforceability may be limited
by (i) the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) general
principles of equity and (iii) the effect of foreign laws which may limit the
enforcement of certain provisions of a Credit Document executed by a non-United
States entity provided that the effect thereof does not materially impair the
rights and remedies of the Agent and the Lenders under such Credit Document.

     6.6  Financial Data.
          --------------

          The Borrower has furnished to the Lenders the following financial
statements (the "Financials"): (i) the unaudited consolidated balance sheet of
the Borrower as of, and consolidated statements of income for the fiscal year
ended, December 31, 2000 and (ii) the unaudited consolidated balance sheet of
the Borrower as of, and consolidated statement of income for the nine (9) months
ended, September 30, 2001 prepared by the chief accounting officer of the
Borrower. The Financials are and the historical financial statements to be
furnished to the Lenders in accordance with Section 7.1 below will be in
                                            -----------
accordance with the books and records of the Borrower, except as provided in
Section 7.1, and fairly present the financial condition of the Borrower at the
-----------
dates thereof and the results of operations for the periods indicated (subject,
to normal year-end and audit adjustments and the absence of statements of cash
flows, shareholder's equity and footnotes). Such financial statements have been
and will be prepared in conformity with GAAP consistently applied throughout the
periods involved, except as provided in Section 7.1 or as otherwise disclosed in
                                        -----------
such financial statements. Since September 30, 2001, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.

     6.7  Locations of Offices, Records and Inventory.
          -------------------------------------------

          The Secured Credit Parties' principal places of business and chief
executive offices are set forth in Schedule 6.7 hereto, and the books and
                                   ------------
records of the Secured Credit Parties and all chattel paper and all records of
accounts are located at the principal places of business and chief executive
offices of such Secured Credit Party. There is no jurisdiction in the United
States in which any Secured Credit Party or any of its Subsidiaries has any
Collateral (except for vehicles, intermodal equipment consisting of containers,
mobile refrigeration units and mobile generator sets, Inventory held for
shipment by third Persons, Inventory in transit, Inventory held for processing
by third Persons, or immaterial quantities of assets, equipment or Inventory)
other than those jurisdictions listed on Schedule 6.7. Schedule 6.7 is a true,
                                         ------------  ------------
correct and complete list of (i) the legal names and addresses of each
warehouseman, filler, processor and packer at which Inventory is stored, (ii)
the address of the chief executive offices of the Secured Credit Parties and
(iii) the address of all offices where records and books of account of the
Secured Credit Parties are kept. None of the receipts received by any of the
Secured Credit Parties from any warehouseman, filler, processor or packer states
that the goods covered thereby are to be delivered to bearer or to the order of
a named person or to a named person and such named person's assigns.

                                       65
<PAGE>

     6.8  Fictitious Business Names.
          -------------------------

          No Secured Credit Party has used any corporate or fictitious name
during the five (5) years preceding the date hereof, other than the name shown
on its or such Subsidiary's articles or certificate of incorporation or
certification of formation and as set forth on Schedule 6.8.
                                               ------------

     6.9  Subsidiaries.
          ------------

          The only Subsidiaries of the Borrower are those listed on Schedule 6.9
                                                                    ------------
attached hereto. The record and beneficial owner of all of the shares of Capital
Stock of each of the Subsidiaries listed on Schedule 6.9 is as set forth on
                                            ------------
Schedule 6.9, there are no proxies, irrevocable or otherwise, with respect to
------------
such shares, and no equity securities of any of the Subsidiaries are or may
become required to be issued by reason of any options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of any
Capital Stock of any Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Subsidiary is or may become bound to
issue additional shares of its Capital Stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by the Borrower are
owned by it free and clear of any Liens other than Permitted Liens. Each of the
Persons identified on Schedule 6.9 as an Inactive Subsidiary is an Inactive
                      ------------
Subsidiary.

     6.10 No Judgments or Litigation.
          --------------------------

          Except as set forth on Schedule 6.10, no judgments, orders, writs or
                                 -------------
decrees are outstanding against the Borrower or any of its Subsidiaries nor is
there now pending or, to the best of the Borrower's knowledge after diligent
inquiry, threatened any litigation, contested claim, investigation, arbitration,
or governmental proceeding by or against the Borrower or any of its Subsidiaries
except judgments and pending or threatened litigation, contested claims,
investigations, arbitrations and governmental proceedings which could not
reasonably be expected to have a Material Adverse Effect.

     6.11 No Defaults.
          -----------

          Neither the Borrower nor any of its Subsidiaries is in default under
any term of any indenture, contract, lease, agreement, instrument or other
commitment to which any of them is a party or by which any of them is bound
which default has had or could be reasonably expected to have a Material Adverse
Effect.

     6.12 No Employee Disputes.
          --------------------

          There are no controversies pending or, to the best of the Borrower's
knowledge after diligent inquiry, threatened between the Borrower or any of its
Subsidiaries and any of their respective employees, other than those arising in
the ordinary course of business which could not, in the aggregate, have a
Material Adverse Effect.

                                       66
<PAGE>

     6.13 Compliance with Law.
          -------------------

          Neither the Borrower nor any of its Subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule or order of
any foreign, federal, state or local government, or any other Governmental
Authority or any self regulatory organization, or any judgment, decree or order
of any court, applicable to its business or operations except where the
aggregate of all such violations or failures to comply would not have a Material
Adverse Effect. The conduct of the business of the Borrower and each of its
Subsidiaries is in conformity with all securities, commodities, energy, public
utility, zoning, building code, health, OSHA and environmental requirements and
all other foreign, federal, state and local governmental and regulatory
requirements and requirements of any self regulatory organizations, except where
such non-conformities could not reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received
any notice to the effect that, or otherwise been advised that, it is not in
compliance with, and neither the Borrower nor any of its Subsidiaries has any
reason to anticipate that any currently existing circumstances are likely to
result in the violation of any such statute, law, ordinance, regulation, rule,
judgment, decree or order which failure or violation could reasonably be
expected to have a Material Adverse Effect.

     6.14 PACA.
          ----

          Neither the Borrower nor any of its Subsidiaries has violated or
failed to comply with PACA, except for any violation or failure which could not
reasonably be expected to have a Material Adverse Effect. Neither the purchases
by CIL of bananas nor the purchases by CIL of plantains give rise to the
formation of a trust under PACA. Neither the purchases by the Borrower of
bananas from CIL nor the purchases from CIL of plantains give rise to the
formation of a trust under PACA. Neither the bananas nor the plantains, the
sales of which in each case give rise to Accounts, nor the Accounts, are subject
to a trust under PACA.

     6.15 ERISA.
          -----

          Neither the Borrower, any of its Subsidiaries nor any Controlled ERISA
Affiliate maintains or contributes to any Benefit Plan or Retiree Health Plan
other than those listed on Schedule 6.15. Each such Benefit Plan has been and is
                           -------------
being maintained and funded in accordance with its terms and in compliance in
all material respects with all provisions of ERISA and the Internal Revenue Code
applicable thereto. The Borrower, each of its Subsidiaries and each Controlled
ERISA Affiliate has fulfilled all obligations related to the minimum funding
standards of ERISA and the Internal Revenue Code for each Benefit Plan, is in
compliance in all material respects with the currently applicable provisions of
ERISA and of the Internal Revenue Code and has not incurred any liability (other
than routine liability for premiums) under Title IV of ERISA. Except as
previously reported to the Agent, no Termination Event has occurred nor has any
other event occurred that may result in such a Termination Event which could
reasonably be expected to have a Material Adverse Effect. No event or events
have occurred in connection with which the Borrower, any of its Subsidiaries,
any Controlled ERISA Affiliate, any fiduciary of a Benefit Plan or any Benefit
Plan, directly or indirectly, would be subject to any liability, individually or
in the aggregate, under ERISA, the Internal Revenue Code or any other law,
regulation or governmental order or under any agreement, instrument, statute,
rule of law or regulation pursuant to or under which any such entity has agreed
to indemnify or is

                                       67
<PAGE>

required to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirements of, any such statute,
regulation or order which could reasonably be expected to have a Material
Adverse Effect. No ERISA Affiliate (excluding for purposes hereof any ERISA
Affiliate which is a Controlled ERISA Affiliate) has incurred or to the best
knowledge of the Borrower and its Subsidiaries, could reasonably be expected to
incur, any liability under ERISA, the Internal Revenue Code, or any other
applicable law that has had or could reasonably be expected to have a Material
Adverse Effect.

     6.16 Compliance with Environmental Laws.
          ----------------------------------

          Except as disclosed on Schedule 6.16 attached hereto, (a) the
                                 -------------
operations of the Borrower and each of its Subsidiaries comply with all
applicable federal, state or local environmental, health and safety statutes,
regulations, directions, ordinances, criteria or guidelines except where such
failure to comply could not reasonably be expected to have a Material Adverse
Effect and (b) to the Borrower's knowledge, none of the operations of the
Borrower or any of its Subsidiaries is the subject of any judicial or
administrative proceeding alleging the violation of any federal, state or local
environmental, health or safety statute, regulation, direction, ordinance,
criteria or guidelines except where such proceeding could not reasonably be
expected to have a Material Adverse Effect. Except as disclosed on Schedule
                                                                   --------
6.16, to the Borrower's knowledge, none of the operations of the Borrower or any
----
of its Subsidiaries is the subject of any federal or state investigation
evaluating whether the Borrower or any of its Subsidiaries disposed any
hazardous or toxic waste, substance or constituent or other substance at any
site that may require remedial action, or any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
hazardous or toxic waste, substance or constituent, or other substance into the
environment where it is reasonably likely that the Borrower's share of the cost
of remediation or clean-up would exceed $250,000. Except as disclosed on
Schedule 6.16, neither the Borrower nor any of its Subsidiaries has filed any
-------------
notice under CERCLA Section. 103(c), 42 U.S.C. Section. 9603(c) or its
equivalent order, or any other federal or state law indicating past or present
treatment, storage or disposal of a hazardous waste or reporting an unpermitted
spill or release of a hazardous or toxic waste, substance or constituent that
remains uncorrected where it is reasonably likely that the Borrower's share of
the cost of remediation or clean-up would exceed $250,000. Except as disclosed
on Schedule 6.16, neither the Borrower nor any of its Subsidiaries has any
   -------------
contingent liability of which the Borrower has knowledge or reasonably should
have knowledge in connection with any release of any hazardous or toxic waste,
substance or constituent, nor has the Borrower or any of its Subsidiaries
received any notice, letter or other indication of potential liability arising
from the disposal of any hazardous or toxic waste, substance or constituent,
except where such potential liability could not reasonably be expected to have a
Material Adverse Effect.

     6.17 Use of Proceeds.
          ---------------

          All proceeds of the Loans will be used only in accordance with Section
                                                                         -------
7.13.
----

                                       68
<PAGE>

     6.18 Intellectual Property.
          ---------------------

          The Borrower and each of its Subsidiaries possess adequate assets,
licenses, patents, patent applications, copyrights, service marks, trademarks
and trade names to continue to conduct its business as heretofore conducted by
it. Schedule 6.18 attached hereto sets forth (a) all of the federal, state and
    -------------
foreign registrations of trademarks, service marks and trade names of the
Borrower and its Subsidiaries, and all pending applications for any such
registrations, (b) all of the patents and registered copyrights of the Borrower
and its Subsidiaries and all pending applications therefor and (c) all other
trademarks, service marks and trade names owned by or licensed to and used by
the Borrower or any of its Subsidiaries in connection with their businesses and
the loss of which would have a Material Adverse Effect (collectively, clauses
(a), (b) and (c), the "Proprietary Rights"). The Borrower or one of its
Subsidiaries is the owner of each of the trademarks listed on Schedule 6.18 as
                                                              -------------
indicated on such schedule, and except as set forth on Schedule 6.18, no other
                                                       -------------
Person has the right to use any of such marks in commerce either in the
identical form or, to the knowledge of the Borrower and its Subsidiaries, in
such near resemblance thereto as may be likely to cause confusion or to cause
mistake or to deceive. Each of the trademarks listed on Schedule 6.18 and
                                                        -------------
identified as a "U.S." registered trademark is a federally registered trademark
of the Borrower or one of its Subsidiaries having the registration number and
issue date set forth on Schedule 6.18. The Proprietary Rights listed on Schedule
                        -------------                                   --------
6.18 are all those used in the businesses of the Borrower and its Subsidiaries,
----
the loss of which would have a Material Adverse Effect. Except as disclosed on
Schedule 6.18, no person has a right to receive any royalty or similar payment
-------------
in respect of any Proprietary Rights pursuant to any contractual arrangements
entered into by the Borrower, or any of its Subsidiaries, and, to the knowledge
of the Borrower and its Subsidiaries, no person otherwise has a right to receive
any royalty or similar payment in respect of any such Proprietary Rights except
as disclosed on Schedule 6.18. Except as disclosed on Schedule 6.18 or as
                -------------                         -------------
permitted by Section 9.14, neither the Borrower nor any of its Subsidiaries has
             ------------
granted any license or sold or otherwise transferred any interest in any of the
Proprietary Rights to any other person. To the knowledge of the Borrower and its
Subsidiaries, the use of each of the Proprietary Rights by the Borrower and its
Subsidiaries is not infringing upon or otherwise violating the rights of any
third party in or to such Proprietary Rights, and no proceeding has been
instituted against or written notice received by the Borrower or any of its
Subsidiaries that are presently outstanding alleging that the use of any of the
Proprietary Rights infringes upon or otherwise violates the rights of any third
party in or to any of the Proprietary Rights, except such alleged infringement
that is not reasonably likely to have a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries has given notice to any Person that it is
infringing on any of the Proprietary Rights and to the best of the Borrower's
knowledge, no Person is infringing on any of the Proprietary Rights, unless such
alleged infringement could not reasonably be expected to have a Material Adverse
Effect. All of the Proprietary Rights of the Borrower and its Subsidiaries are
valid and enforceable rights of the Borrower and its Subsidiaries and will not
cease to be valid and in full force and effect by reason of the execution and
delivery of this Credit Agreement or the Credit Documents or the consummation of
the transactions contemplated hereby or thereby. The Borrower is the owner of
the Proprietary Rights which are the subject of the Appraisal and CBII does not
own any of such Proprietary Rights.

                                       69
<PAGE>

     6.19 Licenses and Permits.
          --------------------

          The Borrower and each of its Subsidiaries has obtained and holds in
full force and effect, all material franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary to the operation of its business as
presently conducted. Neither the Borrower nor any of its Subsidiaries is in
violation of the terms of any such franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, right or
approval in any such case which could not reasonably be expected to have a
Material Adverse Effect.

     6.20 Title to Property.
          -----------------

          Each Borrower Entity has good and marketable title to all of its owned
property (including without limitation, all real and other property in each case
as reflected in the Financial Statements delivered to the Agent hereunder),
other than properties disposed of in the ordinary course of business or in any
manner otherwise permitted under this Credit Agreement since the date of the
most recent audited consolidated balance sheet of the Borrower, and in each case
subject to no Liens other than Permitted Liens.

     6.21 Labor Matters.
          -------------

          There is (a) no material unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under
collective bargaining agreements that has or could reasonably be expected to
have a Material Adverse Effect is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (b) no strike, labor dispute, slowdown or stoppage pending against the
Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against any of them that has or could reasonably be expected to have
a Material Adverse Effect, and (c) no union representation question with respect
to the employees of the Borrower or any Subsidiaries and no union organizing
activity that has or could reasonably be expected to have a Material Adverse
Effect.

     6.22 Investment Company.
          ------------------

          Neither the Borrower nor any of its Subsidiaries is (a) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, (b) a "holding company" or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended, or (c) subject to
any other law which purports to regulate or restrict its ability to borrow money
or to consummate the transactions contemplated by this Credit Agreement or the
other Credit Documents or to perform its obligations hereunder or thereunder.

                                       70
<PAGE>

     6.23 Margin Security.
          ---------------

          Neither the Borrower nor any of its Subsidiaries owns any margin stock
and no portion of the proceeds of any Loans or Letters of Credit shall be used
by the Borrower for the purpose of purchasing or carrying any "margin stock" (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
or for any other purpose, in either case, which violates the provisions or
Regulation T, U or X of said Board of Governors or for any other purpose in
violation of any applicable statute or regulation, or of the terms and
conditions of this Credit Agreement.

     6.24 No Event of Default.
          -------------------

          No Default or Event of Default has occurred and is continuing.

     6.25 Taxes and Tax Returns.
          ---------------------

          Each Borrower Entity has filed, or caused to be filed, all material
tax returns (federal, state, local and foreign) required to be filed and paid
all amounts of taxes shown thereon to be due (including interest and penalties)
and has paid all other material taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (a) that are not yet
delinquent or (b) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. Except as covered by (a) and (b) of the immediately
preceding sentence, with respect to those arising after the date hereof, the
Borrower is not aware of any proposed material tax assessments against it or any
other Borrower Entity.

     6.26 Indebtedness; CBII Obligations.
          ------------------------------

          Neither the Borrower nor any of its Subsidiaries has Indebtedness that
is senior, pari passu or subordinated in right of payment to their Indebtedness
to the Lenders hereunder, except for Permitted Indebtedness. Except as set forth
on Schedule 6.26, neither the Borrower nor any of its Subsidiaries has
   -------------
guaranteed (in whole or in part) or is otherwise directly or indirectly
responsible or liable for any or all of the obligations of CBII.

     6.27 Status of Accounts.
          ------------------

          Each Account is based on an actual and bona fide sale and delivery of
goods or rendition of services to customers, made by the Borrower in the
ordinary course of its business; the goods and inventory being sold and the
Accounts created are its exclusive property and are not and shall not be subject
to any Lien, consignment arrangement, encumbrance, security interest or
financing statement whatsoever, other than the Permitted Liens; and the
Borrower's customers have accepted the goods or services, owe and are obligated
to pay the full amounts stated in the invoices according to their terms, without
any dispute, offset, defense, counterclaim or contra (including, but not limited
to, claims arising under PACA) that could reasonably be expected to have, when
aggregated with any such other disputes, offsets, defenses, counterclaims or
contras, a Material Adverse Effect. The Borrower confirms to the Lenders that
any and all taxes or fees relating to its business, its sales, the Accounts or
the goods relating thereto, are its

                                       71
<PAGE>

sole responsibility and that same will be paid by the Borrower when due (unless
duly contested and adequately reserved for) and that none of said taxes or fees
is or will become a lien on or claim against the Accounts.

     6.28 Representations and Warranties.
          ------------------------------

          Each of the representations and warranties made in the Operative
Documents by the Borrower and its Subsidiaries and, to the knowledge of the
Borrower and its Subsidiaries, the other parties thereto, was or will be true
and correct in all material respects as of when made.

     6.29 Material Contracts.
          ------------------

          Schedule 6.29 sets forth a true, correct and complete list of all the
          -------------
Material Contracts currently in effect. None of the Material Contracts contains
provisions the performance or nonperformance of which have or could reasonably
be expected to have a Material Adverse Effect. All of the Material Contracts are
in full force and effect, and no material defaults currently exist thereunder.

     6.30 Survival of Representations.
          ---------------------------

          All representations made by the Borrower in this Credit Agreement and
in any other Credit Document shall survive the execution and delivery hereof and
thereof.

     6.31 Affiliate Transactions.
          ----------------------

          Except as set forth on Schedule 6.31 (and transactions permitted by
                                 -------------
Section 9.2, Section 9.7 or Section 9.8), neither the Borrower nor any of its
-----------  -----------    -----------
Subsidiaries is a party to or bound by any agreement or arrangement (whether
oral or written) to which any Affiliate of the Borrower or Subsidiary is a party
except (a) in the ordinary course of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and (b) upon fair and reasonable
terms no less favorable to the Borrower and such Subsidiary than it could obtain
in a comparable arm's-length transaction with an unaffiliated Person.

     6.32 Insurance.
          ---------

          As of the Original Closing Date, Schedule 6.32 accurately describes
                                           -------------
the insurance coverage maintained by the Borrower and its Subsidiaries.

     6.33 Accuracy and Completeness of Information.
          ----------------------------------------

          Except for projections, all factual information heretofore,
contemporaneously or hereafter furnished by or on behalf of the Borrower or any
of their respective Subsidiaries in writing to the Agent, any Lender, or the
Independent Accountant for purposes of or in connection with this Credit
Agreement or any Credit Documents, or any transaction contemplated hereby or
thereby is or will be true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information not misleading at
such time. All projections from time to time delivered to the Agent or one or
more Lenders have been prepared based upon

                                       72
<PAGE>

assumptions which the Borrower believes in good faith are reasonable at the time
such projections are delivered to the Agent or such Lenders.

                                  ARTICLE VII.

                              AFFIRMATIVE COVENANTS

          Until termination of this Credit Agreement and the Commitments
hereunder and payment and satisfaction of all Obligations due or to become due
hereunder, the Borrower agrees that it shall, and, with respect to covenants
which apply to its Subsidiaries or to Credit Parties, it shall cause its
Subsidiaries or the Credit Parties, as applicable, to, unless the Required
Lenders shall have otherwise consented in writing:

     7.1  Information.
          -----------

          The Borrower will furnish to the Lenders the following information
within the following time periods:

          (a) within one hundred and twenty (120) days after the close of each
fiscal year of the Borrower both (i) the audited consolidated balance sheet and
consolidated statements of income, shareholder's equity and cash flow of the
Borrower and its consolidated Subsidiaries and (ii) an unaudited consolidating
balance sheet and consolidating statements of income, cash flows and
shareholder's equity which shall present separately the financial condition and
results of operations of the Borrower and its Subsidiaries (other than CPF and
its Subsidiaries) and the financial condition and results of operations of CPF
and its Subsidiaries, in each case, for such year, each in reasonable detail,
each setting forth in comparative form the corresponding figures for the
preceding year, prepared in accordance with GAAP, and accompanied by a report
and unqualified audit opinion (such report and opinion not to include any going
concern qualification) (in the case of the reports under clause (i) above) or an
"other financial information report" (in the case of the reports under clause
(ii) above) of Ernst & Young LLP or other Independent Accountant selected by the
Borrower and approved by the Required Lenders;

          (b) within sixty (60) days after the end of each of the first three
(3) fiscal quarters of the Borrower, both (i) the unaudited consolidated balance
sheet, consolidated statement of income and consolidated statement of cash flow,
of the Borrower and its consolidated Subsidiaries and (ii) an unaudited
consolidating balance sheet and consolidating statements of income and cash
flows which shall present separately the financial condition and results of
operations of the Borrower and its Subsidiaries (other than CPF and its
Subsidiaries) and the financial condition and results of operations of CPF and
its Subsidiaries, in the form regularly prepared by the Borrower and consistent
with the Financials, together with a certificate of the chief accounting officer
or treasurer of the Borrower stating that such financial statements fairly
present the financial condition of the Borrower and its consolidated
Subsidiaries or the Borrower and its consolidated Subsidiaries (other than CPF
and its Subsidiaries) at the dates thereof and the results of their operations
for the periods indicated (subject to normal year-end and audit adjustments and
the absence of statements of shareholders' equity and footnotes) and that such
financial statements have been prepared in conformity with GAAP consistently
applied throughout the periods involved except as otherwise disclosed in such
financial statements;

                                       73
<PAGE>

          (c) within thirty (30) days after the end of each fiscal month of the
Borrower (other than January, March, June, September and December), a copy of
the internal operating income analysis for such month and for the period from
the beginning of the current fiscal year to the end of such month, in reasonable
detail setting forth in comparative form the corresponding analysis for the same
month and same year-to-date period in the preceding fiscal year, in the form
regularly prepared by the Borrower, certified by the chief accounting officer or
treasurer of the Borrower as being a true and correct copy;

          (d) at the time of delivery of the quarterly financial statements of
the Borrower pursuant to paragraph (b) above and the annual financial statements
pursuant to paragraph (a) above, a certificate, executed by the chief accounting
officer or treasurer of the Borrower, in substantially the form of Exhibit F
                                                                   ---------
attached hereto (the "Compliance Certificate"), and stating that such officer
has caused this Credit Agreement to be reviewed and has no knowledge of any
default by the Borrower in the performance or observance of any of the
provisions of this Credit Agreement, during such quarter or at the end of such
year, or, if such officer has such knowledge, specifying each default and the
nature thereof, and compliance by the Borrower as of the date of such statement
with the financial covenants set forth in Article VIII hereof and the other
                                          ------------
applicable covenants set forth in Exhibit F;
                                  ---------

          (e) within thirty (30) days after the end of each fiscal month of the
Borrower (provided, that if Availability (without giving effect to the
Resolution Block), plus the amount of the Borrower's and its Subsidiaries'
(other than any Excluded Entity's) unrestricted cash and Cash Equivalents is
less than $20,000,000, such reporting shall be done weekly), a Revolving Credit
Borrowing Base Certificate (the "Revolving Credit Borrowing Base Certificate")
in substantially the form of Exhibit G hereto, duly completed and certified by
                             ---------
the Borrower's chief accounting officer or treasurer, detailing, among other
things, the Borrower's Eligible Accounts Receivable as of the end of the
immediately preceding month end and the then outstanding amount of all amounts
owing by the Borrower to Persons (other than CIL) for the purchase of bananas
and plantains. In addition, within thirty (30) days after the end of each fiscal
month of the Borrower (or if such day is not a Business Day, then on the next
succeeding Business Day), the Borrower shall furnish a written report to the
Lenders setting forth (i) the accounts receivable aged trial balance at the
immediately preceding month end (along with a report reconciling accounts
receivable to the prior month's receivables aging) for each account debtor, aged
by due date; such aging reports shall indicate which Accounts are current, up to
thirty (30), thirty (30) to sixty (60) and over sixty (60) days past due and
shall list the names of all applicable account debtors and (ii) a monthly
accounts payable listing or open item listing including a report as to all
claims (which have given rise or could give rise to a trust under PACA) arising
under PACA owing by the Borrower or its Subsidiaries and a report as to all
banana and plantain supplier accruals owing by the Borrower (which report shall
include a schedule of amounts owing to CIL by the Borrower and a schedule of
amounts owed by CIL to its banana and plantain suppliers), with such listings
and reports to be in form satisfactory to the Agent. The Agent may, but shall
not be required to, rely on each Revolving Credit Borrowing Base Certificate
delivered hereunder as accurately setting forth the available Revolving Credit
Borrowing Base for all purposes of this Credit Agreement until such time as a
new Revolving Credit Borrowing Base Certificate is delivered to the Agent in
accordance herewith; Revolving Credit Borrowing Base Certificates may be
prepared and submitted to the Lenders on a more frequent basis, provided that
                                                                --------
such certificate complies with the requirements set forth elsewhere herein;

                                       74
<PAGE>

          (f) within thirty (30) days after the end of each fiscal month of the
Borrower (it being agreed that no report shall be required for each fiscal
January and the applicable report for each fiscal February shall include
year-to-date information), a certificate executed by the person preparing such
report, in substantially the form of Exhibit F-1 attached hereto (the "Monthly
Compliance Certificate") including a report setting forth (i) the aggregate
amounts paid to CBII during such month by the Borrower and its Subsidiaries (and
the reasons therefor, including detailed information regarding payments during
such month and for the year to date) of (A) Allocated CBII Overhead, (B)
Unallocated CBII Overhead and (C) Permitted Restructuring Expenses; (ii) the
aggregate amount owing to CBII by the Borrower and its Subsidiaries as of the
last day of such month (and the reasons therefor); (iii) a detailed list of the
amounts, as of the last day of such month, of the Permitted Investments
permitted pursuant to each of clauses (iv), (vii), (ix), (x), (xi), (xii),
(xiv), (xvi) and (xvii) of the definition of Permitted Investments; (iv) a
detailed list of the amounts, as of the last day of such month, of the Permitted
Indebtedness permitted pursuant to each of clauses (b), (c), (d)(iii), (d)(vii),
(d)(viii), (d)(ix), (d)(x), (d)(xi) and (d)(xii) of the definition of Permitted
Indebtedness; (v) a list of all sales of Tropical Farms or Asset Dispositions
consummated during such month (which list shall include the names of the
applicable Subsidiaries and the purchase price received in connection
therewith), the amount of the aggregate Asset Sale Blocks and the amount of the
aggregate Farm Sale Blocks as of the last day of such month and the amount, as
of the last day of such month, of all proceeds of sales of Tropical Farms after
the Original Closing Date that have been used to make Capital Expenditures; (vi)
a report detailing all Assets Dispositions with a value not exceeding
$1,000,000, which have occurred during the prior fiscal month; (vii) a report
detailing cash receipts and related transfers through the tri-party accounts;
and (viii) a list of any sale-leaseback transactions which were completed in
such month;

          (g) promptly upon receipt thereof, copies of the portions relevant to
the Borrower of all management letters and other material reports which are
prepared by its Independent Accountants in connection with any audit of the
Borrower's financial statements by such Accountants;

          (h) as soon as practicable but, in any event, within ten (10) Business
Days after the issuance thereof, copies of all regular and periodic reports
which CBII or the Borrower may be required to file with the Securities and
Exchange Commission or any similar or corresponding governmental commission,
department or agency substituted therefor, or any similar or corresponding
Governmental Authority;

          (i) no later than thirty (30) days after the end of the Borrower's
fiscal year during each year when this Credit Agreement is in effect, a forecast
for the current fiscal year of (i) the Borrower and its Subsidiaries which
includes projected consolidated statement of income for such fiscal year and a
projected consolidated statement of cash flows for such fiscal year and
projected consolidated balance sheets, statements of income and statements of
cash flows on a quarterly basis for such fiscal year; (ii) the Borrower and its
Subsidiaries (other than CPF and its Subsidiaries) which includes projected
consolidating statements of income for such fiscal year and a projected
consolidating statement of cash flows for such fiscal year and projected
consolidating balance sheets, statements of income and statements of cash flows
on a quarterly basis for such fiscal year; and (iii) Availability under the
Revolving Credit Borrowing Base for such fiscal year; provided that the parties
                                                      --------
acknowledge that the information in such forecasts is

                                       75
<PAGE>

not compiled or presented in accordance with GAAP and may not necessarily be
presented on a basis consistent with the Borrower's financial statements to be
delivered pursuant to paragraphs (a) and (b) above;

          (j) promptly and in any event within three (3) Business Days after
becoming aware of the occurrence of a Default or Event of Default, a certificate
of the chief executive officer, chief accounting officer or treasurer of the
Borrower specifying the nature thereof and the Borrower's proposed response
thereto, each in reasonable detail;

          (k) promptly upon a responsible officer of Borrower obtaining
knowledge thereof, copies of all claims (which have given rise or could give
rise to a trust under PACA) filed with respect to any Credit Party under or
pursuant to PACA (or any similar statute, law, rule or regulation); and

          (l) with reasonable promptness, such other data, reports or
information as the Agent or any of the Lenders may reasonably request.

     7.2  [Intentionally Deleted]

     7.3  Corporate Existence.
          --------------------

          The Borrower and each of its Subsidiaries (other than Inactive
Subsidiaries) (a) subject to Section 9.4 hereof, will maintain their corporate
                             -----------
or limited liability company existence, will maintain in full force and effect
all material licenses, bonds, franchise, leases, trademarks and qualifications
to do business (provided, that an entity may cease to maintain its franchises
                --------
and qualifications to do business if it ceases to exist as a result of a
transaction permitted by Section 9.4 hereof), (b) will obtain or maintain
                         -----------
patents, contracts and other rights necessary to the profitable conduct of their
businesses, (c) will continue in, and limit their operations to, the same
general lines of business as that presently conducted by them and (d) will
comply with all applicable laws and regulations of any federal, state or local
Governmental Authority, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect.

     7.4  ERISA.
          ------

          The Borrower will deliver to the Agent, at the Borrower's expense, the
following information at the times specified below:

          (a) within ten (10) Business Days after the Borrower, any of its
Subsidiaries or any Controlled ERISA Affiliate knows or has reason to know that
a material Termination Event has occurred, a written statement of the chief
accounting officer of the Borrower describing such Termination Event and the
action, if any, which the Borrower or other such entities have taken, are taking
or propose to take with respect thereto, and when known, any action taken or
threatened by the Internal Revenue, DOL or PBGC with respect thereto;

          (b) within ten (10) Business Days after the Borrower, any of its
Subsidiaries or any Controlled ERISA Affiliate knows or has reason to know that
a prohibited transaction (as defined in Section 406 of ERISA and Section 4975 of
the Internal Revenue Code) has occurred, a statement of the chief accounting
officer of the Borrower describing such transaction and the

                                       76
<PAGE>

action which the Borrower or other such entities have taken, are taking or
propose to take with respect thereto;

          (c) within thirty (30) Business Days after the filing thereof with the
DOL, Internal Revenue or PBGC, copies of each annual report (form 5500 series),
including all schedules and attachments thereto, filed with respect to each
Benefit Plan of the Borrower, its Subsidiaries or any Controlled ERISA
Affiliate;

          (d) within thirty (30) Business Days after receipt by the Borrower,
any of its Subsidiaries or any Controlled ERISA Affiliate of each actuarial
report for any Benefit Plan or Multiemployer Plan of the Borrower, its
Subsidiaries or any Controlled ERISA Affiliate and each annual report for any
such Multiemployer Plan, copies of each such report;

          (e) within ten (10) Business Days prior to the filing thereof with the
Internal Revenue, a copy of any funding waiver request with respect to any
Benefit Plan of the Borrower, its Subsidiaries or any Controlled ERISA Affiliate
and within three (3) Business Days after receipt of any communications received
by the Borrower, any of its Subsidiaries or any Controlled ERISA Affiliate with
respect to such request;

          (f) within ten (10) Business Days upon the occurrence thereof,
notification of any increase in the benefits of any existing Benefit Plan of the
Borrower, its Subsidiaries or any Controlled ERISA Affiliate or the
establishment of any new Benefit Plan of the Borrower, its Subsidiaries or any
Controlled ERISA Affiliate or the commencement of contributions to any Benefit
Plan to which the Borrower, any of its Subsidiaries or any Controlled ERISA
Affiliate was not previously contributing;

          (g) within three (3) Business Days after receipt by the Borrower, any
of its Subsidiaries or any Controlled ERISA Affiliate of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;

          (h) within ten (10) Business Days after receipt by the Borrower, any
of its Subsidiaries or any Controlled ERISA Affiliate of any favorable or
unfavorable determination letter from the Internal Revenue Service regarding the
qualification of a Benefit Plan or other employee pension benefit plan intending
to qualify under section 401(a) of the Internal Revenue Code of the Borrower,
its Subsidiaries or any Controlled ERISA Affiliate under Section 401(a) of the
Internal Revenue Code, copies of each such letter;

          (i) within ten (10) Business Days after receipt by the Borrower, any
of its Subsidiaries or any Controlled ERISA Affiliate of a notice regarding the
imposition of withdrawal liability under any Multiemployer Plan, copies of each
such notice;

          (j) within ten (10) Business Days prior to the date the Borrower, any
of its Subsidiaries or any Controlled ERISA Affiliate intends to fail to make a
required installment or any other required payment under Section 412 of the
Internal Revenue Code on or before the due date for such installment or payment,
a notification of such failure;

          (k) within three (3) Business Days after the Borrower, any of its
Subsidiaries or any Controlled ERISA Affiliate knows (a) a Multiemployer Plan of
the Borrower, its

                                       77
<PAGE>

Subsidiaries or any Controlled ERISA Affiliate has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan of the Borrower, its
Subsidiaries or any Controlled ERISA Affiliate intends to terminate any such
Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan of the Borrower,
its Subsidiaries or any Controlled ERISA Affiliate, a written statement setting
forth any such event or information;

          (l) within three (3) Business Days after the Borrower, any of its
Subsidiaries or any Controlled ERISA Affiliate knows that an ERISA Affiliate
(excluding for purposes hereof any ERISA Affiliate which is a Controlled ERISA
Affiliate) has incurred or to the best knowledge of the Borrower and its
Subsidiaries, could reasonably be expected to incur, any liability under ERISA,
the Internal Revenue Code, or any other law applicable to Benefit Plans that has
had or could reasonably be expected to have a Material Adverse Effect, a
statement of the chief accounting officer of the Borrower describing such
transaction and the action which the Borrower or other such entities have taken,
are taking or propose to take with respect thereto; and

          (m) within thirty (30) days after receipt by the Borrower or any of
its Subsidiaries of each actuarial report for any Retiree Health Plan of
Borrower or any of its Subsidiaries, copies of each such report.

          For purposes of this Section 7.4, the Borrower, any of its
                               -----------
Subsidiaries and any Controlled ERISA Affiliate shall be deemed to know all
facts known by the administrator of any Benefit Plan of which such entity is
then the plan sponsor.

          The Borrowers will establish, maintain and operate all Benefit Plans
of the Borrower, of its Subsidiaries or any Controlled ERISA Affiliate to comply
in all material respects with the provisions of ERISA, the Internal Revenue
Code, and all other applicable laws, and the regulations and interpretations
thereunder other than to the extent that the Borrower is in good faith
contesting by appropriate proceedings the validity or implication of any such
provision, law, rule, regulation or interpretation.

     7.5  Proceedings or Adverse Changes.
          -------------------------------

          The Borrower will as soon as practicable, and in any event within
thirty (30) Business Days after the Borrower learns of the following, give
written notice to the Agent of any proceeding(s) being instituted or threatened
in writing to be instituted by or against the Borrower or any of its
Subsidiaries in any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or foreign) that is
reasonably likely to expose Borrower or any of its Subsidiaries to liability in
excess of $2,500,000 (without regard to whether any or all of such amount is
covered by insurance). The Borrower will as soon as possible, and in any event
within five (5) Business Days after the Borrower learns of the following, give
written notice to the Agent of any Material Adverse Change. Provision of any
such notice by the Borrower will not constitute a waiver or excuse of any
Default or Event of Default occurring as a result of such changes or events.

                                       78
<PAGE>

     7.6  Environmental Matters.
          ----------------------

          The Borrower will conduct its business and the businesses of each of
its Subsidiaries so as to comply in all material respects with all environmental
laws, regulations, directions and ordinances in all applicable jurisdictions
including, without limitation, environmental land use, occupational safety or
health laws, regulations, directions, ordinances, requirements or permits in all
applicable jurisdictions, except to the extent that the Borrower or any of its
Subsidiaries is contesting, in good faith by appropriate legal proceedings, any
such law, regulation, direction, ordinance or interpretation thereof or
application thereof; provided, further, that the Borrower and each of its
                     -----------------
Subsidiaries will comply with the order of any court or other governmental body
of the applicable jurisdiction relating to such laws unless the Borrower or its
Subsidiaries shall currently be prosecuting an appeal or proceedings for review
and shall have secured a stay of enforcement or execution or other arrangement
postponing enforcement or execution pending such appeal or proceedings for
review. If the Borrower or any of its Subsidiaries shall (a) receive notice that
any violation of any federal, state or local environmental law, regulation,
direction or ordinance may have been committed or is about to be committed by
the Borrower or any of its Subsidiaries except where such violation could not
reasonably be expected to have a Material Adverse Effect, (b) receive notice
that any administrative or judicial complaint or order has been filed or is
about to be filed against the Borrower or any of its Subsidiaries alleging
violations of any federal, state or local environmental law, regulation,
direction or ordinance requiring the Borrower or any of its Subsidiaries to take
any action in connection with the release of toxic or hazardous substances into
the environment where the cost of taking any such action is reasonably likely to
exceed $250,000 or (c) receive any notice from a federal, state, or local
governmental agency or private party alleging that the Borrower or any of its
Subsidiaries may be liable or responsible for costs associated with a response
to or cleanup of a release of a toxic or hazardous substance into the
environment or any damages caused thereby except where such liability could not
reasonably be expected to have a Material Adverse Effect, the Borrower will
provide the Agent with a copy of such notice within forty-five (45) days after
the receipt thereof by the Borrower or any of its Subsidiaries. Within
forty-five (45) days after the Borrower learns of the enactment or promulgation
of any federal, state or local environmental law, regulation, direction,
ordinance, criteria or guideline which could reasonably have a Material Adverse
Effect, the Borrower will provide the Agent with notice thereof. The Borrower
will promptly take all actions necessary to prevent the imposition of any Liens
on any of its properties arising out of or related to any environmental matters.
At the time that the Agent learns of any environmental condition or occurrence
at any property of the Borrower, which environmental condition or occurrence has
or could reasonably be expected to have a Material Adverse Effect, the Agent may
request, and at the sole cost and expense of the Borrower, the Borrower will
retain, an environmental consulting firm, satisfactory to the Agent in its
commercially reasonable judgment, to conduct an environmental review and audit
of such affected property and promptly provide to the Agent and each Lender a
copy of any reports delivered in connection therewith.

     7.7  Books and Records; Inspection.
          ------------------------------

          (a)The Borrower will, and will cause each of its Subsidiaries to,
maintain books and records pertaining to their property and assets in such
detail, form and scope as is consistent with good business practice.

                                       79
<PAGE>

          (b) The Borrower agrees that the Agent or its agents may enter upon
the premises of the Borrower or any of its Subsidiaries at any time and from
time to time, during normal business hours, and at any time at all on and after
the occurrence of an Event of Default which continues beyond the expiration of
any grace or cure period applicable thereto, and which has not otherwise been
waived by the Agent, for the purpose of (a) enabling the Agent's internal
auditors to conduct quarterly field examinations at the Borrower's expense (such
expense to include amounts specified in Section 14.8), (b) inspecting the
                                        ------------
Collateral, (c) inspecting and/or copying (at Borrowers' expense) any and all
records pertaining thereto, (d) discussing the affairs, finances and business of
the Borrower with any officers and employees of the Borrower, (e) discussing the
affairs, finances and business of the Borrower with the Independent Accountant,
but only so long as the Agent has provided prior notice to the Borrower and the
discussions with the Independent Accountant are reasonable in scope and
frequency and (f) verifying Eligible Accounts Receivable. The Lenders, in the
reasonable discretion of the Agent, may accompany the Agent at their sole
expense in connection with the foregoing inspections. The Borrower agrees to
afford the Agent thirty (30) days prior written notice of any change in the
location of any Collateral (other than Inventory held for shipment by third
Persons, Inventory and equipment in transit, Inventory held for processing by
third Persons or immaterial quantities of assets, equipment or Inventory) or in
the location of its chief executive office or place of business from the
locations specified in Schedule 6.7, and to execute in advance of such change,
                       ------------
cause to be filed and/or delivered to the Agent any financing statements or
other documents required by the Agent, all in form and substance satisfactory to
the Agent. The Borrower agrees to furnish any Lender with such other information
regarding its business affairs and financial condition as such Lender may
reasonably request from time to time.

     7.8  Collateral Records.
          -------------------

          The Borrower will, and will cause each Borrower Entity to, execute and
deliver to the Agent, from time to time, solely for the Agent's convenience in
maintaining a record of the Collateral, such written statements and schedules as
the Agent may reasonably require, including without limitation those described
in Section 7.1 of this Credit Agreement, designating, identifying or describing
   -----------
the Collateral. The Borrower's or any Borrower Entity's failure, however, to
promptly give the Agent such statements or schedules shall not affect, diminish,
modify or otherwise limit the Lenders' security interests in the Collateral. The
Borrower agrees to maintain such books and records regarding Accounts and the
other Collateral as the Agent may reasonably require, and agrees that such books
and records will reflect the Lenders' interest in the Accounts and such other
Collateral.

     7.9  Security Interests.
          -------------------

          The Borrower will, and will cause each Borrower Entity to, defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein. The Borrower agrees to, and will cause each
Borrower Entity to, comply with the requirements of all state and federal laws
in order to grant to the Lenders valid and perfected first security interest in
the Collateral subject only to Permitted Liens. The Agent is hereby authorized
by each Borrower Entity to file any financing statements covering the Collateral
whether or not any Borrower Entity's signature appears thereon. The Borrower
agrees to, and will cause each Borrower Entity to, do whatever the Agent may
reasonably request, from time to

                                       80
<PAGE>

time, by way of: filing notices of liens, financing statements, fixture filings
and amendments, renewals and continuations thereof; cooperating with the Agent's
custodians; keeping stock records; obtaining waivers from landlords and
mortgagees and from warehousemen, fillers, processors and packers and their
respective landlords and mortgagees; paying claims, which might if unpaid,
become a Lien (other than a Permitted Lien) on the Collateral; assigning its
rights to the payment of Accounts pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Sections.3727 et. seq.) (the failure of which to so
assign will permit the Agent to exclude such accounts from the Revolving Credit
Borrowing Base); and performing such further acts as the Agent may reasonably
require in order to effect the purposes of this Credit Agreement and the other
Credit Documents. Any and all fees, costs and expenses of whatever kind and
nature (including any Taxes, reasonable attorneys' fees or costs for insurance
of any kind), which the Agent may incur with respect to the Collateral or the
Obligations: in filing public notices; in preparing or filing documents; making
title examinations or rendering opinions; in protecting, maintaining, or
preserving the Collateral or its interest therein; in enforcing or foreclosing
the Liens hereunder, whether through judicial procedures or otherwise; or in
defending or prosecuting any actions or proceedings arising out of or relating
to its transactions with any Borrower Entity under this Credit Agreement or any
other Credit Document, will be borne and paid by the Borrower. If the same are
not promptly paid by the Borrower, the Agent may pay the same on the Borrower's
behalf, and the amount thereof shall be an Obligation secured hereby and due to
the Agent on demand.

     7.10 Insurance; Asset Loss.
          ----------------------

          The Borrower will, and will cause each of its Subsidiaries to,
maintain third party liability insurance and replacement value property
insurance on their assets under such policies of insurance, with such insurance
companies, in such amounts and covering such risks as are consistent with
industry practices and consistent with the insurance described on Schedule 6.32.
                                                                  --------------
All such policies (other than to the extent they relate solely to one or more
Excluded Entities) are to name the Borrower, the Agent and the Lenders as
additional insureds on liability policies and the Agent and the Borrower as loss
payees in case of property loss, as their interests may appear, and are to
contain such other provisions as the Agent may reasonably require to fully
protect the Agent's interest in the assets of the Borrower and its Subsidiaries
and to any payments to be made under such policies. True copies of all original
insurance policies or certificates of insurance evidencing such insurance
covering the assets of the Borrower and its Subsidiaries are to be delivered to
the Agent, to the extent such policies or certificates have not been previously
delivered to the Agent, on or prior to the Closing Date, premium prepaid, with
(other than to the extent they relate solely to one or more Excluded Entities)
the loss payable endorsement in the Agent's favor, and shall provide for not
less than ten (10) days prior written notice to the Agent, of the exercise of
any right of cancellation. In the event the Borrower or any of its Subsidiaries
fail to respond in a timely and appropriate manner with respect to collecting
under any insurance policies required to be maintained under this Section 7.10,
                                                                  ------------
the Agent shall have the right, in the name of the Agent, the Borrower or any of
its Subsidiaries, to file claims under such insurance policies, to receive and
give acquittance for any payments that may be payable thereunder, and to execute
any and all endorsements, receipts, releases, assignments, reassignments or
other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies. The Borrower will,
and will cause each Subsidiary to, provide written notice to the Lenders of the
occurrence of any of the following events within five

                                       81
<PAGE>

(5) Business Days after the Borrower's risk management department learns (or
should reasonably have learned) of the occurrence of such event: any asset or
property owned or used by the Borrower or any of its Subsidiaries is (i)
materially damaged or destroyed, or suffers any other loss or (ii) is condemned,
confiscated or otherwise taken, in whole or in part, or the use thereof is
otherwise diminished so as to render impracticable or unreasonable the use of
such asset or property for the purpose to which such asset or property were used
immediately prior to such condemnation, confiscation or taking, by exercise of
the powers of condemnation or eminent domain or otherwise, and in either case
amount of the damage, destruction, loss or diminution in value of the assets of
the Borrower and its Subsidiaries is in excess of, in the aggregate for the
Borrower and all of its Subsidiaries, $2,000,000 in any fiscal year of the
Borrower (any such damage, destruction, loss or diminution in value of the
Collateral is referred to herein as an "Asset Loss"). The Borrower will, and
will cause each Subsidiary to, diligently file and prosecute its claim or claims
for any award or payment in connection with an Asset Loss. In the event of an
Asset Loss, the Borrower will, and will cause each Subsidiary (other than an
Excluded Entity) to, pay to the Agent, promptly upon receipt thereof, any and
all insurance proceeds and payments received by a Subsidiary on account of
damage, destruction or loss of all or any portion of the assets of the Borrower
or its Subsidiaries (other than an Excluded Entity) to which the Agent is
entitled. The Agent's right to retain such insurance proceeds is subject to (i)
the limitations set forth in the definition of Asset Loss, and until there is an
Asset Loss and unless an Event of Default shall have occurred and be continuing,
the Agent shall pay to Borrower (or as directed by Borrower) any such insurance
proceeds to which Borrower is entitled and (ii) the rights of any lessor or
secured creditor senior to Agent, if the underlying obligation is permitted by
this Credit Agreement. The Agent may, with the consent of the Required Lenders,
either (a) apply the proceeds realized from Asset Losses, as set forth in
Section 2.3(b) or (b) pay such proceeds to the Borrower or the applicable
--------------
Subsidiary to be used to repair, replace or rebuild the asset or property or
portion thereof that was the subject of the Asset Loss. After the occurrence and
during the continuance of an Event of Default, (i) no settlement on account of
any such Asset Loss (other than those of an Excluded Entity) shall be made
without the consent of the Lenders and (ii) the Agent may participate in any
such proceedings and the Borrower will, and will cause each applicable
Subsidiary to, deliver to the Agent such documents as may be requested by the
Agent to permit such participation and will consult with the Agent, its
attorneys and agents in the making and prosecution of such claim or claims. The
Borrower and each Subsidiary (other than an Excluded Entity) hereby irrevocably
authorizes and appoints the Agent its attorney-in-fact, after the occurrence and
continuance of an Event of Default, to collect and receive for any such award or
payment and to file and prosecute such claim or claims, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest, and the
Borrower shall, and will cause each such Subsidiary to, upon demand of the
Agent, make, execute and deliver any and all assignments and other instruments
sufficient for the purpose of assigning any such award or payment to the Agent
for the benefit of the Lenders, free and clear of any encumbrances of any kind
or nature whatsoever.

     7.11 Taxes.
          ------

          The Borrower will, and will cause each of the Subsidiaries to, pay,
when due and in any event prior to delinquency, all Taxes lawfully levied or
assessed against the Borrower, any of its Subsidiaries or any of the Collateral;
provided, however, that unless such Taxes have become a federal tax Lien or
--------  -------
ERISA Lien on any of the assets of the Borrower or any Subsidiary,

                                       82
<PAGE>

no such Tax need be paid if the same is being contested in good faith, by
appropriate proceedings promptly instituted and diligently conducted and if an
adequate reserve or other appropriate provision shall have been made therefor as
required in order to be in conformity with GAAP.

     7.12 Compliance With Laws.
          ---------------------

          The Borrower will, and will cause each of its Subsidiaries to, comply
with all acts, rules, regulations, orders, and ordinances of any legislative,
administrative or judicial body or official applicable to the Collateral or any
part thereof, or to the operation of its business, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.

     7.13 Use of Proceeds.
          ----------------

          Subject to the terms and conditions hereof, the proceeds of any Loans
made hereunder shall be used by the Borrower solely for the financing of working
capital and the financing of capital expenditures for food-related businesses
(other than the fresh or processed meat business); provided, however, that in
                                                   --------  -------
any event, no portion of the proceeds of any such advances shall be used by the
Borrower for the purpose of purchasing or carrying any "margin stock" (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
or for any other purpose which violates the provisions or Regulation T, U or X
of said Board of Governors or for any other purpose in violation of any
applicable statute or regulation, or of the terms and conditions of this Credit
Agreement.

     7.14 Fiscal Year.
          ------------

          The Borrower agrees that it will give the Agent at least forty-five
(45) days' prior written notice of any change in its fiscal year from a year
ending December 31.

     7.15 Notification of Certain Events.
          -------------------------------

          The Borrower agrees that it will promptly notify the Agent of the
occurrence of any of the following events:

          (a) any Material Contract of the Borrower or any of its Subsidiaries
is terminated or amended in any material adverse respect or any new Material
Contract is entered into (in which event the Borrower shall provide the Agent
with a copy of such Material Contract); or

          (b) any of the terms upon which suppliers to the Borrower or any of
its Subsidiaries do business with the Borrower or any of its Subsidiaries are
changed or amended in any respect which has or could reasonably be expected to
have a Material Adverse Effect; or

          (c) any order, judgment or decree in excess of $2,500,000 shall have
been entered against the Borrower or any of its Subsidiaries or any of their
respective properties or assets, or

                                       83
<PAGE>

          (d) any written notification of violation of any law or regulation or
any inquiry with respect thereto shall have been received by the Borrower or any
of its Subsidiaries from any local, state, federal or foreign Governmental
Authority or agency which violation could reasonably be expected to have a
Material Adverse Effect.

     7.16 Additional Subsidiaries; Inactive Subsidiaries.
          ----------------------------------------------

          Promptly, and in any event within two (2) Business Days, upon any
Person becoming a direct or indirect Subsidiary of the Borrower or upon any
Subsidiary which was an Inactive Subsidiary ceasing to be an Inactive
Subsidiary, the Borrower will provide the Agent with written notice thereof
setting forth information in reasonable detail describing all of the assets of
such Person and shall, to the extent consistent with the documentation requested
or required prior to such time, (a) cause such Person to execute a Joinder
Agreement in substantially the same form as Exhibit J hereto, (b) cause such
                                            ---------
Person to pledge all of its assets of the type included in the Collateral to the
Agent pursuant to a security agreement in substantially the form of the Security
Agreement and otherwise in a form acceptable to the Agent, (c) cause such Person
to execute and deliver such other documents as the Agent reasonably requests and
(d) execute and deliver such other documentation as the Agent may reasonably
request in connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, Acknowledgment Agreements, certified
resolutions and other organizational and authorizing documents of such Person
and favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to above), all in form, content and scope reasonably
satisfactory to the Agent.

     7.17 Schedules of Accounts and Purchase Orders.
          ------------------------------------------

          In furtherance of the continuing assignment and security interest in
the Accounts of the Borrower granted pursuant to the Security Agreement, upon
the creation of Accounts, the Borrower will execute and deliver to the Agent in
such form and manner as the Agent may require, solely for its convenience in
maintaining records of collateral, such confirmatory schedules of Accounts, and
other appropriate reports designating, identifying and describing the Accounts
as the Agent may require. In addition, upon the Agent's reasonable request, the
Borrower will provide the Agent with copies of agreements with, or purchase
orders from, the customers of the Borrower and CBCNA and copies of invoices to
customers, proof of shipment or delivery and such other documentation and
information relating to said Accounts and other collateral as the Agent may
require. Failure to provide the Agent with any of the foregoing shall in no way
affect, diminish, modify or otherwise limit the security interests granted
herein. The Borrower hereby authorizes the Agent to regard the Borrower's or any
of its Subsidiaries' printed name or rubber stamp signature on assignment
schedules or invoices as the equivalent of a manual signature by the Borrower's
or such Subsidiaries' authorized officers or agents.

     7.18 Collection of Accounts.
          -----------------------

          (a) Other than amounts received in the cafeteria and from the sale of
promotional items to employees at the Borrower's corporate headquarters and
other similar de minimus amounts which are deposited in an account at Firstar
Bank, N.A. in Cincinnati, Ohio,

                                       84
<PAGE>

all proceeds of Collateral in the United States and Canada and all proceeds of
Accounts shall be directed to one or more lockboxes which are subject to
tri-party agreements between the Agent, the applicable Credit Party and
applicable bank or to an Agent Bank Account. All amounts received in such
lockboxes shall be deposited into a bank account in the Agent's name (or with
respect to accounts at Bank of America, N.A., in the Borrower's name for the
benefit of the Agent) (each an "Agent Bank Account") and the Borrower shall, and
                                ------------------
shall cause each of its domestic Subsidiaries to, cause all amounts that it
receives from any source to be deposited into an Agent Bank Account. The Agent
agrees that, unless Availability (without giving effect to the Resolution Block)
(plus the amount of unrestricted cash and Cash Equivalents of the Borrower and
its Subsidiaries' (other than any Excluded Entity) shall fall below $20,000,000
or a Default or an Event of Default has occurred, the Agent shall not deliver a
notice to cause funds in any of the applicable accounts to be sent to any
account of the Agent or any of its Affiliates.

          (b) Any checks, cash, notes or other instruments or property received
by the Borrower or any of its Subsidiaries with respect to any Accounts shall be
held by the Borrower or any of its Subsidiaries in trust for the benefit of the
Lenders, separate from the Borrower's or Subsidiary's own property and funds,
and immediately turned over to the Agent or deposited in lockbox accounts under
the dominion and control of the Agent, with proper assignments or endorsements.
No checks, drafts or other instruments received by the Agent shall constitute
final payment unless and until such instruments have actually been collected.
The Agent on behalf of the Lenders shall have sole dominion and control over the
domestic bank accounts of the Credit Parties subject to the limited rights of
deposit and withdrawal granted to the Credit Parties pursuant to the lockbox
letters delivered to the lockbox banks.

     7.19 Notice; Credit Memoranda; and Returned Goods.
          --------------------------------------------

          In addition to the reports required pursuant to Section 7.1, the
                                                          -----------
Borrower will notify the Agent promptly of any matters materially affecting the
value, enforceability or collectability of any Account, and of all material
customer disputes, offsets, defenses, counterclaims, returns and rejections, and
all reclaimed or repossessed merchandise or goods, provided, however, that such
                                                   --------  -------
notice shall only be required as to any such matter that affects Accounts
outstanding at any one time from any account debtor, which affected Accounts
have a value greater than $500,000. The Borrower will issue credit memoranda
promptly (with duplicates to the Agent upon its request for same) upon accepting
returns or granting allowances, and may continue to do so until the occurrence
of an Event of Default which continues beyond the expiration of the applicable
grace or cure period, or which has not otherwise been waived by the Required
Lenders. After the occurrence and during the continuance of an Event of Default,
the Borrower agrees that all returned, reclaimed or repossessed merchandise or
goods shall be set aside by the Borrower, marked with the Lenders' name and held
by the Borrower for the Lenders' account as owner and assignee.

     7.20 Acknowledgment Agreements.
          --------------------------

          The Borrower will assist the Agent in obtaining executed
Acknowledgment Agreements from each of the warehousemen, processors, packers,
fillers, landlords and mortgagees with whom the Borrower conducts business from
time to time.

                                       85
<PAGE>

     7.21 Trademarks etc.
          --------------

          The Borrower will do and cause to be done all things necessary to
preserve and keep in full force and effect all registrations of trademarks,
service marks and other marks, trade names or other trade rights which
registrations are of value to the Borrower or any of its Subsidiaries (other
than those which are, individually and in the aggregate, of de minimus value).

     7.22 Maintenance of Property.
          -----------------------

          The Borrower will, and will cause each of its Subsidiaries to, keep
all property necessary to its respective business in good working order and
condition (ordinary wear and tear excepted) in accordance with their past
operating practices and not to commit or suffer any waste with respect to any of
its properties, except for properties which either individually or in the
aggregate are not material.

     7.23 [Intentionally Deleted]

     7.24 Revisions or Updates to Schedules.
          ---------------------------------

          If any of the information or disclosures provided on any of Schedules
                                                                      ---------
6.7, 6.8, 6.9, 6.15, 6.18 or 6.29, originally attached hereto become outdated or
- - ---- ---- ----- -----    ----
incorrect in any material respect, the Borrower shall deliver to the Agent and
the Lenders as part of the compliance certificate required pursuant to Section
                                                                       -------
7.1(d) (or earlier if the Borrower so elects) such revision or updates to such
-----
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s) which revisions shall be effective from the date accepted in writing
by the Agent, such acceptance not to be unreasonably withheld or delayed;
provided, that no such revisions or updates to any such Schedule(s) shall be
deemed to have cured any breach of warranty or misrepresentation occurring prior
to the delivery of such revision or update by reason of the inaccuracy or
incompleteness of any such Schedule(s) at the time such warranty or
representation previously was made or deemed to be made.

     7.25 [Intentionally Deleted]

     7.26 Compliance with PACA.
          ---------------------

          The Borrower shall, and shall cause each Borrower Entity to:

          (a) Comply with all applicable provisions of PACA, including, without
limitation, those governing trust formation and prompt repayment.

          (b) Maintain written records pertaining to perishable agricultural
commodities and by-products in its possession to which a constructive trust
under PACA is applicable.

All terms used in this Section 7.26 and defined in PACA shall have the meanings
                       ------------
ascribed to such terms therein.

                                       86
<PAGE>

     7.27 Covenants Relating to Food Security Act.
          ---------------------------------------

          The Borrower shall, and shall cause each Borrower Entity to:

          (a) Promptly provide the Agent with a copy of any notice received by
the Borrower with respect to a security interest created by a seller of farm
products.

          (b) With respect to any farm products produced in a state with a
central filing system, register with the secretary of state of such state prior
to the purchase of such farm products.

All terms used in this Section 7.27 and defined in the Food Security Act shall
                       ------------
have the meanings ascribed to such terms therein.

     7.28 Payment for Perishable Goods.
          ----------------------------

          (a) The Borrower shall pay, not later than one (1) Business Day prior
to the date required for payment therein, any outstanding invoices for
perishable agricultural commodities purchased from any vendor other than an
Affiliate; provided, however, that in the event that any such invoice requires
           --------  -------
payment upon delivery, payment shall be made on such date of delivery, provided,
                                                                       --------
further, however, that any such invoices which require payment upon delivery may
-------
be paid at a later date up to thirty (30) days after delivery of such
commodities so long as the Borrower has provided evidence satisfactory to the
Agent of prior course of dealing with any existing or current vendor and for all
vendors carried out in accordance with standard industry practices or the
Borrower has obtained a waiver of the vendors' rights under PACA.
Notwithstanding anything to the contrary contained in this Section 7.28(a),
                                                           ---------------
neither Borrower nor any Subsidiary shall be obligated to pay amounts on any
invoice with respect to which Borrower or such Subsidiary has a bona fide
dispute concerning payment for any reason, including, without limitation,
quality of the perishable commodities received, quantity of the perishable
commodities received, or compliance of the perishable commodities received with
applicable rules and regulations.

          (b) The Borrower shall pay, in the event that written notification
other than on an invoice is received from any vendor of perishable agricultural
commodities of its intent to enforce its rights under Section 5 of PACA, or to
establish a federal statutory lien or trust under the Food Security Act, the
related invoice within one (1) Business Day of receipt and promptly notify the
Agent of such receipt; provided, however, that such invoice may remain unpaid
                       --------  -------
if, and only so long as, (i) appropriate legal or administrative action has been
commenced and is being diligently pursued or defended by the Borrower, (ii) the
ability of the vendor to pursue any rights or enforce any liens or trusts
provided under PACA has been stayed or is otherwise legally prohibited during
the pendency of such action or the benefits of Section 5 of PACA are not
available to such vendor and (iii) the Agent shall have established a reserve
against the Revolving Credit Borrowing Base in an amount at least equal to the
amount claimed to be due by such vendor under the relevant invoice.
Notwithstanding anything to the contrary contained in this Section 7.28(b),
                                                           ----------------
neither Borrower nor any Subsidiary shall be obligated to pay the full amount of
any invoice which is subject to offset by Borrower or such Subsidiary pursuant
to Section 46.46(e)(4) of the regulations promulgated under PACA. This Section
                                                                       -------
7.28 should not
----

                                       87
<PAGE>

be construed to impose a responsibility on Borrower or any of its Subsidiaries
to pay to the vendor or report to the Agent any informal or formal complaints
received by Borrower or any such Subsidiary under PACA; instead, this Section
                                                                      -------
7.28 should be construed to impose such responsibilities only in the event a
---
formal claim under a statutory trust under Section 5 of PACA is made by a
vendor.

                                  ARTICLE VIII.

                               FINANCIAL COVENANTS

          Until termination of this Credit Agreement and the Commitments
hereunder and payment and satisfaction of all Obligations due or to become due
hereunder, the Borrower agrees that, unless the Required Lenders shall have
otherwise consented in writing:

     8.1  Leverage Ratio.
          --------------

          The Borrower and its consolidated Subsidiaries (other than CPF and its
Subsidiaries) shall have a Leverage Ratio, as of the end of each fiscal quarter
of the Borrower of no greater than 2.65:1.00.

     8.2  Fixed Charge Coverage Ratio.
          ----------------------------

          The Borrower and its consolidated Subsidiaries (other than CPF and its
Subsidiaries) shall have a Fixed Charge Coverage Ratio (tested quarterly), of at
least 1.00:1.00 for the four (4) fiscal quarter period then ended.

     8.3  Capital Expenditures.
          --------------------

          The Borrower shall not, and shall not permit its Subsidiaries (other
than CPF and its Subsidiaries) to, make or commit to make Consolidated Capital
Expenditures in an aggregate amount in excess of the amounts set forth below,
for the following fiscal years:

      Fiscal Year               Capital Expenditures Limit
 ----------------------         --------------------------
 2002                           $50,000,000
 2003 - and each fiscal         $55,000,000
       year thereafter

provided, however, that (a) the amount expended in any fiscal year for any
--------  -------
Permitted Acquisition shall not reduce the Capital Expenditure limit for such
fiscal year and (b) the proceeds of any property loss under any insurance policy
applied to replace or rebuild any such affected property shall not be included
in the calculation of Consolidated Capital Expenditures for the purpose of
determining compliance with this Section 8.3.
                                 -----------

                                       88
<PAGE>

     8.4  EBITDA.
          -------

          The Borrower and its consolidated Subsidiaries (other than CPF and its
Subsidiaries) shall have Consolidated EBITDA of at least (i) $126,000,000 for
the four (4) fiscal quarter period ending March 31, 2002; (ii) $130,000,000 for
the four (4) fiscal quarter period ending June 30, 2002; (iii) $135,000,000 for
the four (4) fiscal quarter period ending September 30, 2002; (iv) $140,000,000
for the four (4) fiscal quarter period ending December 31, 2002; and (v)
$150,000,000 for the four (4) fiscal quarter period ending on each fiscal
quarter thereafter.

     8.5  Chiquita Fresh Latin American Group.
          -----------------------------------

          (a) The Borrower shall not permit the aggregate amount of cash and
Cash Equivalents owned or maintained by Persons which are members of the
Chiquita Fresh Latin American Group to exceed $10,000,000 at any time, provided
that such members may own or maintain up to $20,000,000 of cash and Cash
Equivalents from time to time for a period not to exceed two (2) Business Days.

          (b) The Borrower shall not permit Persons which are members of the
Chiquita Fresh Latin American Group to make or commit to make Capital
Expenditures in an aggregate amount for all of the Persons which are members of
the Chiquita Fresh Latin American Group in excess of (i) $25,000,000 during
fiscal year 2002; (ii) $30,000,000 during fiscal year 2003; and (iii)
$30,000,000 during fiscal year 2004; provided, however, that the proceeds of any
                                     --------  -------
property loss under any insurance policy applied to replace or rebuild any such
affected property shall not be included in the calculation of Capital
Expenditures for the purpose of determining compliance with this Section 8.5.
                                                                 ------------

                                  ARTICLE IX.

                               NEGATIVE COVENANTS

          Until termination of the Credit Agreement and the Commitments
hereunder and payment and satisfaction of all Obligations due or to become due
hereunder, the Borrower agrees that, unless the Required Lenders shall have
otherwise consented in writing, it will not, and will not permit any of the
Subsidiaries to:

     9.1  Restrictions on Liens.
          ----------------------

          Mortgage, assign, pledge or otherwise permit any Lien (whether as a
result of a purchase money or title retention transaction, or other security
interest, or otherwise) to exist on any of its assets or properties, whether
real, personal or mixed, whether now owned or hereafter acquired, except for
Permitted Liens; provided, that this covenant shall not apply to an Excluded
                 --------
Entity to the extent complying with this covenant would cause a breach or
default of any agreement relating to borrowed money to which such Excluded
Entity is a party.

     9.2  Restrictions on Indebtedness.
          -----------------------------

          Incur, create or suffer to exist any Indebtedness other than Permitted
Indebtedness.

                                       89
<PAGE>

     9.3  Restrictions on Transfer of Assets.
          ----------------------------------

          Sell, lease, assign, transfer or otherwise dispose of any assets
(including Intellectual Property and the Capital Stock of any Subsidiary of the
Borrower) other than:

          (a) sales of Inventory in the ordinary course of business,

(b) sale-leaseback transactions (involving assets other than Proprietary
Rights), when the applicable selling entity receives fair market value for the
sale and which are permitted by Section 9.13,
                                ------------

          (c) transfers (other than of Proprietary Rights) to a Secured Credit
Party,

          (d) sales in the ordinary course of business, when the applicable
selling entity receives fair market value for the sale of assets or properties
(other than Inventory, Proprietary Rights or Capital Stock of any Subsidiary of
the Borrower) used in the Borrower's or a Subsidiary's business that are worn
out (it being agreed that (x) the Net Cash Proceeds of each such sale of worn
out assets shall be paid to the Agent and (A) applied to repay outstanding
Revolving Loans (and if such Net Cash Proceeds are so applied, a block against
Revolving Loans and Letters of Credit (an "Asset Sale Block") in the amount so
applied shall be put in place) and (B) to the extent there are not sufficient
outstanding Revolving Loans then outstanding, held by the Agent as Collateral
(provided, however, that if the applicable sale was made by a Subsidiary which
 --------  -------
is not a Person organized under the laws of the United States of America (or a
political subdivision thereof) and the Borrower in good faith believes that
paying such Net Cash Proceeds to the Agent would expose the Borrower to tax
liabilities that the Borrower would not otherwise have, as long as Availability
is, at the time of the receipt of such Net Cash Proceeds by the Borrower or the
applicable Subsidiary, at least equal to the amount of such Net Cash Proceeds
(and the Borrower delivers a written statement representing and warranting to
the Agent and the Lenders that each of such conditions then exist), the Borrower
does not need to pay such Net Cash Proceeds to the Agent (and an Asset Sale
Block will then be put in place in the amount of such Net Cash Proceeds)) and
(y) as long as no Event of Default then exists or would be caused thereby, the
Agent shall release the applicable Asset Sale Block or the applicable funds it
then holds as Collateral pursuant to this clause (d) to the Borrower or the
applicable Subsidiary upon a written request (received by the Agent within one
hundred twenty (120) days of the applicable sale) from the Borrower requesting
that such Asset Sale Block or funds be promptly released by the Agent and
representing and warranting to the Agent and the Lenders that the applicable
funds are going to be used promptly upon such release or receipt thereof by the
Borrower or the applicable Subsidiary to purchase assets to replace the
applicable worn out assets),

          (e) sales, made while no Default or Event of Default has occurred and
is continuing and as long as no Default or Event of Default would result
therefrom, of assets (other than Accounts, Proprietary Rights, general
intangibles or Tropical Farms (or equity interests in Person which own any
Tropical Farms) and Capital Stock of any Subsidiary of the Borrower) that are no
longer needed or useful in such Person's operations as long as (i) at least
seventy-five percent (75%) of the consideration received by the Borrower and its
Subsidiaries is in the form of cash and Cash Equivalents, (ii) the aggregate
consideration (including assumed debt) for all

                                       90
<PAGE>

such sales after the Original Closing Date does not exceed $20,000,000, (iii)
the assets so sold after the Original Closing Date will not have contributed
Consolidated EBITDA, over the four fiscal quarter period ending prior to the
date of such sale, exceeding five percent (5%) of the Consolidated EBITDA as of
December 31, 2000, (iv) the Borrower can demonstrate that had such sale occurred
immediately prior to the then most recently completed four fiscal quarter
period, the Borrower would have been in compliance with the financial covenants
set forth herein, and (v) the Borrower delivers a certificate executed by an
authorized officer of the Borrower representing and warranting to the Agent and
the Lenders that the conditions set forth in clauses (i) through (iv) of this
clause (e) have been satisfied or complied with and that the applicable
transferring entity received fair market value for the applicable assets,

          (f) sales, made while no Default or Event of Default has occurred and
is continuing and as long as no Default or Event of Default would result
therefrom, of the assets set forth on Schedule 9.3 (which schedule shall also
                                      ------------
indicate the minimum amount of the Loans that shall be repaid upon the sale of
such assets) and which are made on a basis where the selling entity receives
fair market value for the sale,

          (g) dispositions by Excluded Entities,

          (h) sales, made while no Default or Event of Default has occurred and
is continuing and as long as no Default or Event of Default would result
therefrom, of Tropical Farms (and equity interests in Persons which own only
Tropical Farms) in the ordinary course of business as long as (i) no single sale
(or series of related sales) is of property with a fair market value of greater
than $5,000,000, (ii) all of such sales made after the Original Closing Date do
not involve sales of property which produced bananas and plantains in an amount
in excess of ten percent (10%) of the bananas and plantains sold by the Borrower
and its Subsidiaries (to Persons other than the Borrower or a Subsidiary) during
the then most recently completed fiscal year of the Borrower (it being agreed
that if a particular sale is permitted at the time it was made, it shall be
permitted at all times thereafter) and (iii) the Borrower delivers a certificate
executed by an authorized officer of the Borrower representing and warranting to
the Agent and the Lenders that the conditions set forth in clauses (i) and (ii)
of this clause (h) have been satisfied or complied with and that the applicable
selling entity received fair market value for the applicable Tropical Farm (it
being agreed that (x) the Net Cash Proceeds of each such sale of a Tropical Farm
shall be paid to the Agent and (A) applied to repay outstanding Revolving Loans
(and if such Net Cash Proceeds are so applied, a block against Revolving Loans
and Letters of Credit (a "Farm Sale Block") in the amount so applied shall be
put in place) and (B) to the extent there are not sufficient outstanding
Revolving Loans then outstanding, held by the Agent as Collateral (provided,
                                                                   --------
however, that if the Borrower in good faith believes that paying such Net Cash
-------
Proceeds to the Agent would expose the Borrower to tax liabilities that the
Borrower would not otherwise have, as long as Availability is, at the time of
the receipt of such Net Cash Proceeds by the Borrower or the applicable
Subsidiary, at least equal to the amount of such Net Cash Proceeds (and the
Borrower delivers a written statement representing and warranting to the Agent
and the Lenders that each of such conditions then exists), the Borrower does not
need to pay such Net Cash Proceeds to the Agent (and a Farm Sale Block will then
be put in place in the amount of such Net Cash Proceeds)) and (y) as long as no
Event of Default then exists or would be caused thereby, the Agent shall release
the applicable Farm Sale Block or the applicable funds it then holds as
Collateral pursuant to this clause (h) to the Borrower or the applicable
Subsidiary

                                       91
<PAGE>

upon a written request (received by the Agent within one hundred twenty (120)
days of the applicable sale) from the Borrower requesting that such Farm Sale
Block or funds be promptly released by the Agent and representing and warranting
to the Agent and the Lenders that the applicable funds are going to be used
promptly upon such release or receipt thereof by the Borrower or the applicable
Subsidiary) to (1) acquire one or more Tropical Farms (or all of the equity in
one or more entities that own only Tropical Farms) or (2) make a Capital
Expenditure in an existing Tropical Farm owned by a Subsidiary in an amount
(when added to the amount of all proceeds of the sales of Tropical Farms used to
make Capital Expenditures after the Original Closing Date) not to exceed
$2,500,000, and

          (i) the transactions set forth in Schedule 9.3A hereto.
                                            -------------

Notwithstanding the foregoing, Borrower shall not be required to pay to Agent
any asset proceeds obtained from a sale or disposition made pursuant to the
terms of clause (d) or (h) above if the sum of (i) the aggregate amount of such
proceeds plus (ii) the aggregate amount of all proceeds previously received as
         ---
consideration for a sale or disposition permitted pursuant to clause (d) or (h)
above that have not already been paid to Agent is less than $100,000; provided
                                                                      --------
however, that once the sum of all proceeds received pursuant to sales permitted
-------
pursuant to clauses (d) and/or (h) above which have not been paid to the Agent
equals or exceeds $100,000, all such proceeds which have not been paid to the
Agent must be immediately paid to Agent and applied and/or held as Collateral as
provided in clauses (d) and (h) above. All amounts held by the Agent as
Collateral pursuant to this Section 9.3 and not yet applied to prepay Loans
                            -----------
shall bear interest for the account of the Borrower at a rate equal to the
Federal Funds Rate. All such interest shall be treated as a portion of the
original amount held as Collateral by the Agent and shall be released by the
Agent or applied to prepay Loans, as applicable, in accordance with this Section
                                                                         -------
9.3. Any Asset Sale Block, Farm Sale Block or amounts held by the Agent as
---
Collateral pursuant to this Section 9.3 not released by the Agent as described
                            ----------
in clause (d) or (h) above within one hundred twenty (120) days of the
applicable sale shall constitute Net Cash Proceeds from an Asset Disposition and
shall, in accordance with Section 2.3, be applied to prepay Loans (and to the
                          -----------
extent such prepayment relates to any amount of an Asset Sale Block or Farm Sale
Block not so released (a) the Borrower shall be deemed to have requested a
Revolving Loan in the amount of the applicable Asset Sale Block or Farm Sale
Block, (b) such applicable Asset Sale Block or Farm Sale Block shall be released
to permit Revolving Loans to be made, and (c) the requested Revolving Loans
shall be made and the proceeds thereof shall be applied to prepay Loans in
accordance with Section 2.3).
                -----------

     9.4  No Corporate Changes.
          --------------------

          (i) Merge or consolidate with any Person, provided, however, that (a)
                                                    --------  -------
the Credit Parties may merge or consolidate with and into each other (as long
as) if such merger or consolidation involves (x) the Borrower, the Borrower is
the surviving entity, (y) a Secured Credit Party (but not the Borrower), a
Secured Credit Party is the surviving entity or (z) a Guarantor but not a
Secured Credit Party, such Guarantor is the surviving entity), (b) any
Subsidiary of the Borrower may merge or consolidate with and into a Credit Party
(as long as (x) if either of such Persons is the Borrower, the surviving entity
is the Borrower, (y) if neither of such Persons is the Borrower, but one of such
Persons is a Secured Credit Party, the surviving entity is a Secured Credit
Party), or (z) if neither of such Persons is a Secured Credit Party, the

                                       92
<PAGE>

surviving entity is a Guarantor, and (c) any Subsidiary of the Borrower which is
not a Credit Party may merge or consolidate with any Subsidiary of the Borrower
which is not a Credit Party (as long as (x) unless each Person is an Excluded
Entity, the surviving entity is not an Excluded Entity and (y) if either of such
Subsidiaries is a Pledged Entity, the surviving entity is a Pledged Entity) or
(ii) alter or modify the Borrower's or any of its Subsidiaries' Articles or
Certificate of Incorporation or other equivalent organizational document or form
of organization (other than in connection with an Equity Issuance permitted
hereunder) or (iii) alter or modify any legal names, mailing addresses,
principal places of business, structure, status or existence of any Credit Party
unless the same shall have been notified to the Agent in writing at least ten
(10) Business Days prior to such alteration or modification or enter into or
engage in any business, operation or activity materially different from that
presently being conducted by the Borrower; provided, however, that upon ten (10)
                                           --------  ------
days' notice to the Agent (and subject to the prior perfection of the Agent in
the resulting limited liability company interest), any corporation may be
converted to a limited liability company.

     9.5  No Guarantees.
          -------------

          Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any other Person, including, without limitation, any Subsidiary
or Affiliate of the Borrower, except (a) by the endorsement of negotiable
instruments in the ordinary course of business, (b) by the giving of indemnities
in connection with the sale of Inventory or other asset dispositions permitted
hereunder and (c) a guaranty of Indebtedness if the Indebtedness so guaranteed
would itself constitute Permitted Indebtedness of the incurring guarantor;
provided, that (i) any Subsidiary of any Person may guarantee the direct
--------
obligations of such Person as long as such direct obligations are otherwise
permitted hereby (provided, however, that the foregoing shall not permit the
guarantee of any obligation of CBII by the Borrower or any Subsidiary), (ii) GWF
may guarantee the obligations of its Subsidiaries or Subsidiaries of the
Borrower, (iii) any Secured Credit Party may guarantee the obligations (other
than Indebtedness) of any other Secured Credit Party, (iv) any member of the
Chiquita Fresh Latin American Group may guarantee the obligations (other than
Indebtedness) of any other member of the Chiquita Fresh Latin American Group,
(v) any member of the Chiquita Fresh European Group may guarantee the
obligations (other than Indebtedness) of any other member of the Chiquita Fresh
European Group, and (vi) any Excluded Entity may guarantee the obligations of
its Subsidiaries.

     9.6  No Restricted Payments.
          ----------------------

          Make any payment to or for the benefit of CBII (including, without
limitation, a payment to CBII to permit CBII to pay its obligations, a
payment to any holders of obligations of CBII or to any trustee or agent for
holders of obligations of CBII or a payment on or with respect to any obligation
which is subordinated to any or all of the Obligations) or any Restricted
Payment, other than (a) a payment to the Borrower or any Subsidiary of the
Borrower, (b) cash dividends, distributions or payments to make tax sharing
payments in accordance with the CBII tax sharing arrangements as described in
Schedule 9.6 hereto in an amount which is not in excess of the amount which the
-----------
Person making such payment would have been liable to pay the applicable taxing
authorities had it not been filing a consolidated tax return with CBII or a
party to such tax sharing arrangement, (c) payments of Unallocated CBII Overhead
in any fiscal year in a maximum amount of $49,000,000, (d) payments of Allocated
CBII Overhead in any fiscal

                                       93
<PAGE>

year in a maximum amount of the difference of (i) $46,000,000 less (ii) the
payments made by Borrower in respect of certain contractual obligations to
vendors and service providers relating to normal operations that the Borrower
has assumed from CBII with the consent of the Required Lenders, (e) Permitted
Restructuring Expenses, and (f) after the effective date of the plan of
reorganization for CBII relating to CBII's current bankruptcy proceeding ("CBII
Reorganization Consummation"), payments to CBII which CBII, promptly upon
receipt thereof, uses to pay interest on Indebtedness of CBII which exists as of
such effective date of the CBII Reorganization Consummation as long as (i) at
the time of such payment and immediately after giving effect to such payment no
Event of Default shall have occurred and be continuing and the sum of
Availability (without giving effect to the Resolution Block) plus the Borrower's
and its Subsidiaries' (other than any Excluded Entity's) unrestricted cash and
Cash Equivalents shall be equal to at least $65,000,000 and (ii) immediately
prior to each such payment to CBII, a duly authorized officer of the Borrower
executes and delivers an officer's certificate to the Agent certifying that the
conditions set forth in subclause (i) of this clause (f) have been satisfied
with respect to such payment.

     9.7  No Investments.
          ---------------

          Make any Investment other than Permitted Investments.

     9.8  No Affiliate Transactions.
          -------------------------

          Enter into any transaction with, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service to any
Subsidiary or Affiliate of the Borrower except (a) in the ordinary course of and
pursuant to the reasonable requirements of the Borrower's business and upon fair
and reasonable terms no less favorable to the Borrower than could be obtained in
a comparable arm's-length transaction with an unaffiliated Person, (b) as
permitted under Section 9.6 or as described on Schedule 6.31 and (c)
                -----------                    -------------
transactions (other than transfers of Accounts, Proprietary Rights and general
intangibles) among and between Secured Credit Parties.

     9.9  No Prohibited Transactions Under ERISA.
          --------------------------------------

          (a) Except as set forth on Schedule 9.9, engage, or permit any
                                     ------------
Controlled ERISA Affiliate to engage, in any prohibited transaction which could
result in a civil penalty or excise tax described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been previously
obtained from the DOL;

          (b) permit to exist with respect to any Benefit Plan of the Borrower,
its Subsidiaries or any Controlled ERISA Affiliate any accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Internal Revenue
Code), whether or not waived;

          (c) fail, or permit any Controlled ERISA Affiliate to fail, to pay
timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;

                                       94
<PAGE>

          (d) terminate, or permit any Controlled ERISA Affiliate to terminate,
any Benefit Plan where such event would result in any material liability of the
Borrower, any Subsidiary of the Borrower or any Controlled ERISA Affiliate under
Title IV of ERISA;

          (e) fail, or permit any Controlled ERISA Affiliate to fail to make any
required contribution or payment to any Multiemployer Plan;

          (f) fail, or permit any Controlled ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment;

          (g) amend, or permit any Controlled ERISA Affiliate to amend, a
Benefit Plan resulting in an increase in current liability for the plan year
such that either of the Borrower, any Subsidiary of the Borrower or any
Controlled ERISA Affiliate is required to provide security to such Benefit Plan
under Section 401(a)(29) of the Internal Revenue Code;

          (h) withdraw, or permit any Controlled ERISA Affiliate to withdraw,
from any Multiemployer Plan where such withdrawal may result in any material
liability of any such entity under Title IV of ERISA;

          (i) allow any representation made in Section 6.15 to be untrue at any
                                               ------------
time during the term of this Credit Agreement; or

          (j) amend, or adopt any new Retiree Health Plan which would result in
any material increase in liability to Borrower or any its Subsidiaries.

     9.10 No Additional Bank Accounts.
          ----------------------------

          Permit (i) any Secured Credit Party (other than CIL) to open, maintain
or otherwise have any checking, savings or other accounts at any bank or other
financial institution, or any other account where money is or may be deposited
or maintained with any Person, other than the accounts set forth on Schedule
                                                                    --------
9.10 hereto and, after the Closing Date, such other accounts so long as each
---
such account (other than payroll and petty cash accounts maintained as zero
balance accounts and other similar bank accounts with limited or no activity and
balances not exceeding $10,000) is subject to a tri-party lockbox or other
blocked account agreement satisfactory to the Agent nor (ii) CIL to keep any
account as its primary account or as a "concentration" account other than those
currently maintained at Bank of America, N.A. in London. All such checking,
savings or other accounts of the Borrower shall, subject to the terms hereof, be
under the sole dominion and control of the Agent in accordance with the Security
Agreement. All payroll and petty cash accounts shall be maintained as zero
balance accounts.

     9.11 Amendments of Material Contracts.
          ---------------------------------

          Without the prior written consent of the Agent, amend, modify, cancel
or terminate or permit the amendment, modification, cancellation or termination
of any of the Material Contracts if such amendment, modification, cancellation
or termination has or could reasonably be expected to have a Material Adverse
Effect.

                                       95
<PAGE>

     9.12 Additional Negative Pledges.
          ----------------------------

          (a) Create or otherwise cause to exist or become effective, or permit
any of the Subsidiaries to create or otherwise cause to exist or become
effective, directly or indirectly, (i) other than (x) restrictions set forth in
agreements relating to debt for borrowed money of an Excluded Entity, as long as
such restrictions are binding only on the applicable Excluded Entity and its
Subsidiaries, (y) restrictions set forth in documents relating to Permitted
Indebtedness, as long as such restrictions are binding only on the primary
obligor on such Indebtedness (and its Subsidiaries) or (z) as described on
Schedule 9.12, any prohibition or restriction (including any agreement to
-------------
provide equal and ratable security to any other Person in the event a Lien is
granted to or for the benefit of the Agent and the Lenders) on the creation or
existence of any Lien upon the assets of the Borrower or any of its
Subsidiaries, other than Permitted Liens or (ii) any Contractual Obligation,
except as described on Schedule 9.12, which may restrict or inhibit the Agent's
                       -------------
rights or ability to sell or otherwise dispose of the Collateral or any part
thereof after the occurrence of an Event of Default, or

          (b) Suffer to exist or permit any of the Subsidiaries to suffer to
exist, directly or indirectly, (i) other than (x) restrictions set forth in
agreements relating to debt for borrowed money of an Excluded Entity, as long as
such restrictions are binding only on the applicable Excluded Entity, (y)
restrictions set forth in documents relating to Permitted Indebtedness, as long
as such restrictions are binding only on the primary obligor on such
Indebtedness (and its Subsidiaries) and (z) as described on Schedule 9.12, any
                                                            -------------
prohibition or restriction (including any agreement to provide equal and ratable
security to any other Person in the event a Lien is granted to or for the
benefit of the Agent and the Lenders) on the creation or existence of any Lien
upon the assets of the Borrower or any of its Subsidiaries, other than Permitted
Liens or (ii) any Contractual Obligation which may restrict or inhibit the
Agent's rights or ability to sell or otherwise dispose of the Collateral or any
part thereof after the occurrence of an Event of Default, which prohibition,
restriction or Contractual Obligation is more restrictive than those in effect
on the Original Closing Date.

     9.13 Sale and Leaseback.
          ------------------

          Enter into any arrangement, directly or indirectly, whereby the
Borrower or any of its Subsidiaries shall sell or transfer any property owned by
it to a Person (other than the Borrower or any of its Subsidiaries) in order
then or thereafter to lease such property or lease other property which the
Borrower or any of its Subsidiaries intends to use for substantially the same
purpose as the property being sold or transferred (collectively, a "Sale
Leaseback Transaction"); provided, however, the Borrower and its Subsidiaries
                         --------- -------
may enter into Sale Leaseback Transactions involving assets other than Accounts,
general intangibles and Proprietary Rights as long as (i) the current market
value of all assets subject to such transactions after the Original Closing Date
(determined at the time of the applicable transfer) does not exceed $25,000,000,
(ii) the applicable assets are containers and similar equipment and assets
initially acquired by the Borrower or one of its Subsidiaries (from a Person
other than the Borrower or one of its Subsidiaries) after the Original Closing
Date and (iii) such Sale Leaseback Transactions are consummated within one
hundred twenty (120) days of the initial acquisition of such assets by the
Borrower or one of its Subsidiaries from a Person other than the Borrower or one
of its Subsidiaries; provided, further, this Section 9.13 shall not apply to
                     --------  -------       ------------
Excluded Entities.

                                       96
<PAGE>

     9.14 Licenses, Etc.
          --------------

          Other than in the ordinary course of business and on terms and
conditions consistent with the Borrower's historical practices as of the
Original Closing Date, enter into licenses of, or otherwise restrict the use of,
any patents, trademarks or copyrights or other Proprietary Rights. Additionally,
neither Borrower nor CIL will allow any party other than Agent or Lenders to
obtain an interest, including without limitation, any lien, security interest or
charge, in the trademark or license rights granted under the Trademark License
Agreement; provided, however, that this limitation does not prohibit any
sublicensing of these trademark or license rights as contemplated by the
Trademark License Agreement.

     9.15 Limitations.
          -----------

          Create, nor will it permit any of its Subsidiaries (other than an
Excluded Subsidiary) to, directly or indirectly, create or otherwise cause,
incur, assume, suffer or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Person to (a)
pay dividends or make any other distribution on any of such Person's Capital
Stock, (b) pay any Indebtedness owed to the Borrower, (c) make loans or advances
to the Borrower or (d) transfer any of its property to the Borrower, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment provisions in any lease governing a leasehold interest, (ii) any
agreement or other instrument of a Person existing at the time it becomes a
Subsidiary of the Borrower; provided that such encumbrance or restriction is not
                            --------
applicable to any other Person, or any property of any other Person, other than
such Person becoming a Subsidiary of the Borrower and was not entered into in
contemplation of such Person becoming a Subsidiary of the Borrower and (iii)
this Credit Agreement and the other Credit Documents.

     9.16 Transfer Pricing.
          ----------------

          (i) Other than as required by applicable law, modify, or permit any
Subsidiary to modify, its transfer pricing policies in a manner that has, or is
reasonably likely to have, a material adverse effect on the Borrower or any
Guarantor or (ii) make any material modification to the fees or other amounts
paid to GWF or any of its Subsidiaries for the transportation of products and
related services, excluding adjustments reflecting changes in GWF cost
structure.

     9.17 Sales.
          ------

          Permit or cause (i) the Borrower to purchase or otherwise acquire
bananas or plantains from any Person other than CIL (provided, however, that in
any consecutive twelve month period the Borrower may purchase or acquire five
percent (5%) of the aggregate amount of the bananas and plantains which it
purchases and acquires during such period from Persons other than CIL), (ii) CIL
to sell bananas or plantains to any Person (other than the Borrower) for sales
or consumption in North America or (iii) bananas or plantains to be sold in
North America or Europe by any Subsidiary of the Borrower if such bananas or
plantains were not sold by CIL directly or through CBCBV to such Subsidiary of
the Borrower (provided, however, that (a) up to five percent (5%) of the bananas
              --------  -------
and plantains sold in North America by the Borrower during any consecutive
twelve-month period may be purchased from Persons other than CIL and (b) the

                                       97
<PAGE>

bananas and plantains sold in Europe by members of the Chiquita Fresh European
Group may be purchased from a Person other than CIL.

     9.18 Excluded Entities.
          -----------------
          Knowingly take or omit to take any action if the effect of such action
or omission could reasonably be expected to materially decrease the value of the
equity interests in one or more Excluded Entities.

     9.19 Hedging and Interest Rate Protection.
          ------------------------------------
          Enter into any Hedging Agreements other than Hedging Agreements which
constitute Permitted Indebtedness and which are agreements that constitute
hedging and which are not speculative in nature.

     9.20 Payments on Certain Intercompany Obligations.
          --------------------------------------------

          Make any payment on or distribution with respect to any of the
intercompany receivables identified on Schedule 1.1E(3)(B) hereto, whether
                                       ------------------
directly or indirectly (and regardless of whether such payment or distribution
might otherwise be permitted under other provisions of this Agreement), except
for (a) capitalization of intercompany advances that is permitted under the
definition of Permitted Investments, (b) payments or distributions (i) among or
to Secured Credit Parties, (ii) by members of the Chiquita Fresh European Group
to any Person other than an Excluded Entity, or (iii) by members of the Chiquita
Fresh Latin American Group to other members of that Group or to Secured Credit
Parties, (c) payments with respect to current obligations for goods or services
in accordance with ordinary practice, and (d) any other payments or distribution
to the extent that within five (5) Business Days thereafter there is at least an
equivalent payment to one or more Secured Credit Parties.

                                   ARTICLE X.

                                     POWERS

     10.1 Appointment as Attorney-in-Fact.
          -------------------------------

          The Borrower hereby irrevocably authorizes and appoints the Agent, or
any Person or agent the Agent may designate, as the Borrower's attorney-in-fact,
at the Borrower's cost and expense, to exercise, subject to the limitations set
forth in Section 10.2, all of the following powers, which being coupled with an
         ------------
interest, shall be irrevocable until all of the Obligations to the Lenders have
been paid and satisfied in full and all of the Commitments have been terminated:

          (a) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent, the Lenders or the Borrower, as the case may be, any and all
checks, notes, drafts, and other documents or instruments relating to the
Collateral;

                                       98
<PAGE>

          (b) To receive, open and dispose of all mail addressed to the Borrower
and to notify postal authorities to change the address for delivery thereof to
such address as the Agent may designate;

          (c) To request at any time from customers indebted on Accounts, in the
name of the Borrower or a third party designee of the Agent, information
concerning the Accounts and the amounts owing thereon;

          (d) To give customers indebted on Accounts notice of the Lenders'
interest therein, and/or to instruct such customers to make payment directly to
the Agent for the Borrower's account;

          (e) To take or bring, in the name of the Agent, the Lenders or the
Borrower, all steps, actions, suits or proceedings deemed by the Agent necessary
or desirable to enforce or effect collection of the Accounts; and

          (f) To file, record and register any or all of the Lenders' security
interest in intellectual property of the Borrower with the United States Patent
and Trademark Office.

     10.2 Limitation on Exercise of Power.
          -------------------------------

          Notwithstanding anything hereinabove to the contrary, the powers set
forth in subparagraphs (b), (d) and (e) above may only be exercised by the Agent
on and after the occurrence of an Event of Default which has not otherwise been
waived by the Agent. The powers set forth in subparagraphs (a), (c) and (f)
above may be exercised by the Agent at any time.

                                  ARTICLE XI.

                         EVENTS OF DEFAULT AND REMEDIES

     11.1 Events of Default.
          ------------------

          The occurrence of any of the following events shall constitute an
"Event of Default" hereunder:

          (a) failure of the Borrower to pay (i) any interest or Fees or other
amounts hereunder within one (1) Business Day of when due hereunder, in each
case whether at stated maturity, by acceleration, or otherwise, or (ii) any
principal of the Loans or the Letter of Credit Obligations hereunder within one
(1) Business Day of when due hereunder, whether at stated maturity, by
acceleration or otherwise;

          (b) any representation or warranty of a Borrower Entity, contained in
this Credit Agreement, the other Credit Documents or any other agreement,
document, instrument or certificate among the Borrower, the Agent and the
Lenders or executed by the Borrower in favor of the Agent or the Lenders shall
prove untrue in any material respect on or as of the date it was made or was
deemed to have been made;

                                       99
<PAGE>

          (c) failure of the Borrower to perform, comply with or observe any
term, covenant or agreement applicable to it contained in Section 7.1, Section
                                                          ------------ -------
7.5, Section 7.7(b), Section 7.10, Section 7.18, Article VIII or Article IX;
---- --------------- ------------- ------------- ------------    -----------

          (d) failure of the Borrower to perform, comply with or observe any
term, covenant or agreement applicable to it contained in Section 7.7(a) and
such failure is not cured within two (2) Business Days after the Borrower shall
have received notice thereof from the Agent or any Lender;

          (e) failure to comply with any other covenant contained in this Credit
Agreement, the other Credit Documents or any other agreement, document,
instrument or certificate among the Borrower, the Agent and the Lenders or
executed by the Borrower in favor of the Agent or the Lenders and, in the event
such breach or failure to comply is capable of cure, such breach or failure to
comply is not cured within thirty (30) days after the Borrower becomes aware of
its occurrence;

          (f) except as permitted in Section 9.4, dissolution, liquidation,
                                     -----------
winding up or cessation of the business of the Borrower or any Subsidiary (other
than an Inactive Subsidiary) or the failure of the Borrower or any Subsidiary to
meet its debts generally as they mature, or the calling of a meeting by the
Borrower of the Borrower's or any of its Subsidiaries' creditors for purposes of
compromising the Borrower's or any of its Subsidiaries' debts, or the admission
by the Borrower of its inability to pay its debts as they become due;

          (g) the commencement by or against the Borrower or any of its
Subsidiaries of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings with respect to it under any federal or
state law and, in the event any such proceeding is commenced against the
Borrower or any Subsidiary, such proceeding is not dismissed within sixty (60)
days;

          (h) the occurrence of a Change in Control;

          (i) the occurrence of a default or event of default (in each case
which shall continue beyond the expiration of any applicable grace periods)
under, or the occurrence of any event that results in or would permit the
acceleration of the maturity of any note, agreement or instrument evidencing any
other Indebtedness of the Borrower or any of its Subsidiaries and the aggregate
principal amount of all such other Indebtedness with respect to which a default
or an event of default has occurred, or the maturity of which is accelerated or
permitted to be accelerated, exceeds $2,500,000.

          (j) any covenant, agreement or obligation of the Borrower contained in
or evidenced by any of the Credit Documents shall cease to be enforceable in
accordance with its terms, or any party (other than the Agent or the Lenders) to
any Credit Document shall deny or disaffirm its obligations under any of the
Credit Documents, or any Credit Document shall be canceled, terminated, revoked
or rescinded without the express prior written consent of the Agent, or any
action or proceeding shall have been commenced by any Person (other than the
Agent or any Lender) seeking to cancel, revoke, rescind or disaffirm the
obligations of the Borrower under any Credit Document, or any court or other
Governmental Authority shall issue

                                      100
<PAGE>

a judgment, order, decree or ruling to the effect that any of the obligations of
the Borrower to any Credit Document are illegal, invalid or unenforceable;

          (k) [intentionally deleted];

          (l) one or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries in the amount of $2,500,000 or more in the
aggregate (to the extent not paid or covered by insurance (i) provided by a
carrier who has acknowledged coverage and has the ability to perform or (ii) as
determined by the Agent in its reasonable discretion) and any such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within thirty (30) days from the entry thereof; or

          (m) any Termination Event with respect to a Benefit Plan shall have
occurred and be continuing thirty (30) days after notice thereof shall have been
given to the Borrower by the Agent or any Lender, and the current value of such
Benefit Plan's benefits guaranteed under Title IV of ERISA as of the end of that
thirty (30) day period exceeds the then current value of such Benefit Plan's
assets allocable to such benefits by more than $2,500,000 (or in the case of a
Termination Event involving the withdrawal of a substantial employer, the
withdrawing employer's proportionate share of such excess exceeds such amount).

     11.2 Acceleration.
          ------------

          After the occurrence and during the continuance of an Event of
Default, and at any time thereafter, at the direction of the Required Lenders,
the Agent shall, upon the written or telecopied request of the Required Lenders,
and by delivery of written notice to the Borrower from the Agent, take any or
all of the following actions, without prejudice to the rights of the Agent, any
Lender or the holder of any Note to enforce its claims against the Borrower: (a)
declare all Obligations to be immediately due and payable (except with respect
to any Event of Default set forth in Section 11.1(g) in which case all
                                     --------------
Commitments shall terminate and all Obligations shall automatically become
immediately due and payable without the necessity of any notice or other demand)
without presentment, demand, protest or any other action or obligation of the
Agent or any Lender, (b) immediately terminate this Credit Agreement and the
Commitments hereunder; and (c) enforce any and all rights and interests created
and existing under the Credit Documents or arising under applicable law,
including, without limitation, all rights and remedies existing under the
Security Documents and all rights of setoff. The enumeration of the foregoing
rights is not intended to be exhaustive and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be cumulative.

          In addition, upon demand by the Agent or the Required Lenders upon the
occurrence of any Event of Default, and at any time thereafter unless and until
such Event of Default has been waived by the requisite Lenders (in accordance
with the voting requirements of Section 14.10), the Borrower shall deposit with
                                -------------
the Agent for the benefit of the Lenders with respect to each Letter of Credit
then outstanding, promptly upon such demand, cash or Cash Equivalents in an
amount equal to one hundred five percent (105%) of the greatest amount for which
such Letter of Credit may be drawn. Such deposit shall be held by the Agent for
the benefit of the Issuing Bank and the other Lenders as security for, and to
provide for the payment of, outstanding Letters of Credit.

                                      101
<PAGE>

                                  ARTICLE XII.

                                   TERMINATION

          Except as otherwise provided in Article XI of this Credit Agreement,
                                          ----------
the Commitments made hereunder shall terminate on the Maturity Date and all then
outstanding Loans shall be immediately due and payable in full and all
outstanding Letters of Credit shall immediately terminate. Unless sooner
demanded, all Obligations shall become due and payable as of any termination
hereunder or under Article XI and, pending a final accounting, the Agent may
                   ----------
withhold any amounts it then holds, in an amount sufficient, in the Agent's sole
discretion, to cover all of the Obligations, whether absolute or contingent,
unless supplied with a satisfactory indemnity to cover all of such Obligations.
All of the Agent's and the Lenders' rights, liens and security interests shall
continue after any termination until all Obligations have been paid and
satisfied in full.

                                  ARTICLE XIII.

                                    THE AGENT

     13.1 Appointment of Agent.
          --------------------

          (a) Each Lender hereby designates Foothill as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of any
Note or participation in any Letter of Credit by the acceptance of a Note or
participation shall be deemed irrevocably to authorize, the Agent to take such
action on its behalf under the provisions of this Credit Agreement and the Notes
and any other instruments and agreements referred to herein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent shall hold all
Collateral and all payments of principal, interest, Fees, charges and expenses
received pursuant to this Credit Agreement or any other Credit Document for the
ratable benefit of the Lenders. The Agent may perform any of its duties
hereunder by or through its agents or employees.

          (b) The provisions of this Article XIII are solely for the benefit of
                                     ------------
the Agent and the Lenders, and the Borrower shall not have any rights as a third
party beneficiary of any of the provisions hereof (other than Section 13.9). In
                                                              ------------
performing its functions and duties under this Credit Agreement, the Agent shall
act solely as agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation toward or relationship of agency or trust with or
for the Borrower.

     13.2 Nature of Duties of Agent.
          -------------------------

          The Agent shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such hereunder or in connection herewith, unless caused by its
or their gross negligence or willful misconduct. The duties of the Agent shall
be mechanical and administrative in nature; the Agent shall not have by reason
of

                                      102
<PAGE>

this Credit Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Credit Agreement, expressed or implied, is intended to or shall
be so construed as to impose upon the Agent any obligations in respect of this
Credit Agreement except as expressly set forth herein.

     13.3 Lack of Reliance on Agent.
          -------------------------

          (a) Independently and without reliance upon the Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial or other condition and affairs of the
Borrower in connection with the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of the Borrower,
and, except as expressly provided in this Credit Agreement, the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Revolving Loans or at any
time or times thereafter.

          (b) The Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectability, priority or sufficiency of this Credit Agreement or the Notes or
the financial or other condition of the Borrower. The Agent shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Credit Agreement or the
Notes, or the financial condition of the Borrower, or the existence or possible
existence of any Default or Event of Default, unless specifically requested to
do so in writing by any Lender.

     13.4 Certain Rights of the Agent.
          ---------------------------

          The Agent shall have the right to request instructions from the
Required Lenders or, as required, each of the Lenders. If the Agent shall
request instructions from the Required Lenders or each of the Lenders, as the
case may be, with respect to any act or action (including the failure to act) in
connection with this Credit Agreement, the Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent shall have
received instructions from the Required Lenders or each of the Lenders, as the
case may be, and the Agent shall not incur liability to any Person by reason of
so refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders or each of the Lenders, as the case may be.

     13.5 Reliance by Agent.
          -----------------

          The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex teletype or telecopier message, cablegram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. The
Agent may consult with legal counsel (including counsel for the Borrower with
respect to matters concerning the Borrower), independent public accountants and
other experts

                                      103
<PAGE>

selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.

     13.6 Indemnification of Agent.
          ------------------------

          To the extent the Agent is not reimbursed and indemnified by the
Borrower, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder, in any way relating to or arising out
of this Credit Agreement, provided that no Lender shall be liable for any
                          --------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.

     13.7 The Agent in its Individual Capacity.
          ------------------------------------

          With respect to its obligation to lend under this Credit Agreement,
the Loans made by it and the Notes issued to it, its participation in Letters of
Credit issued hereunder, and all of its rights and obligations as a Lender
hereunder and under the other Credit Documents, the Agent shall have the same
rights and powers hereunder as any other Lender or holder of a Note or
participation interests and may exercise the same as though it was not
performing the duties specified herein; and the terms "Lenders", "Required
Lenders", "holders of Notes", or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, acquire equity interests in, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Borrower or any Affiliate of the Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this Credit
Agreement and otherwise without having to account for the same with the Lenders.

     13.8 Holders of Notes.
          ----------------

          The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.

     13.9 Successor Agent.
          ---------------

          (a) The Agent may, upon five (5) Business Days' notice to the Lenders
and the Borrower, resign at any time (effective upon the appointment of a
successor Agent pursuant to the provisions of this Section 13.9(a)) by giving
                                                   ---------------
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, upon five (5) days'
notice, to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after

                                      104
<PAGE>

the retiring Agent's giving of notice of resignation, then, upon five (5) days'
notice, the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank or a trust company or other financial institution
which maintains an office in the United States, or a commercial bank organized
under the laws of the United States of America or of any State thereof, or any
affiliate of such bank or trust company or other financial institution which is
engaged in the banking business, having a combined capital and surplus of at
least $500,000,000. Notwithstanding anything herein to the contrary, so long as
no Event of Default shall have occurred and be continuing, any successor Agent
(whether appointed by the Required Lenders or the Agent) shall have been
approved in writing by the Borrower (such approval not to be unreasonably
withheld).

          (b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article XIII shall inure to its benefit as to any
                              ------------
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement.

     13.10 Collateral Matters.
           ------------------

          (a) Each Lender authorizes and directs the Agent to enter into the
Security Documents for the benefit of the Lenders. Each Lender authorizes and
directs the Agent to make such changes to the form Acknowledgment Agreement
attached hereto as Exhibit A as the Agent deems necessary in order to obtain any
                   ---------
Acknowledgment Agreement from any landlord, warehouseman, filler, packer or
processor of the Borrower. Each Lender also authorizes and directs the Agent to
review and approve all agreements regarding lockboxes and lockbox accounts and
blocked accounts (including the related lockbox or blocked account agreements)
on such terms as the Agent deems necessary. Each Lender hereby agrees, and each
holder of any Note by the acceptance thereof will be deemed to agree, that,
except as otherwise set forth herein, any action taken by the Required Lenders
or each of the Lenders, as applicable, in accordance with the provisions of this
Credit Agreement or the Security Documents, and the exercise by the Required
Lenders or each of the Lenders, as applicable, of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Lenders. The Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of any notice
to or further consent from any Lender, from time to time prior to an Event of
Default, to take any action with respect to any Collateral or Security Document
which may be necessary or appropriate to perfect and maintain perfected the
security interest in and liens upon the Collateral granted pursuant to the
Security Documents.

          (b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in cash and
satisfaction of all of the Obligations (including the Letter of Credit
Obligations) at any time arising under or in respect of this Credit Agreement or
the Credit Documents or the transactions contemplated hereby or thereby, (ii)
constituting property being sold or disposed of upon receipt of the proceeds of
such sale by the Agent if the Borrower certifies to the Agent that the sale or
disposition is made in compliance with Section
                                       -------

                                      105
<PAGE>

9.3 (and the Agent may rely conclusively on any such certificate, without
---
further inquiry) or (iii) if approved, authorized or ratified in writing by the
Required Lenders, unless such release is required to be approved by all of the
Lenders hereunder. Upon request by the Agent at any time, the Lenders will
confirm in writing the Agent's authority to release particular types or items of
Collateral pursuant to this Section 13.10(b).
                            ---------------

          (c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to in
writing by the Required Lenders or all of the Lenders, as applicable, and upon
at least five (5) Business Days' prior written request by the Borrower, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Liens granted
to the Agent for the benefit of the Lenders herein or pursuant hereto upon the
Collateral that was sold or transferred; provided that (i) the Agent shall not
                                         --------
be required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrower or any of its
Subsidiaries in respect of) all interests retained by the Borrower or any of its
Subsidiaries, including (without limitation) the proceeds of the sale, all of
which shall continue to constitute part of the Collateral. In the event of any
sale or transfer of Collateral, or any foreclosure with respect to any of the
Collateral, the Agent shall be authorized to deduct all of the expenses
reasonably incurred by the Agent from the proceeds of any such sale, transfer or
foreclosure.

          (d) The Agent shall have no obligation whatsoever to the Lenders or to
any other Person to assure that the Collateral exists or is owned by the
Borrower or any of its Subsidiaries or is cared for, protected or insured or
that the liens granted to the Agent herein or pursuant hereto have been properly
or sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Agent in this
Section 13.10 or in any of the Security Documents, it being understood and
-------------
agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole
discretion, given the Agent's own interest in the Collateral as one of the
Lenders and that the Agent shall have no duty or liability whatsoever to the
Lenders, except for its gross negligence or willful misconduct.

          (e) The Lenders acknowledge that Foothill has entered into the Pledge
Agreements governed by the law of the Netherlands and Belgium in its individual
capacity. The Lenders agree that if any amounts are received by Foothill
pursuant to such Pledge Agreements, the total amount of the Obligations then
owing shall be decreased by such amounts as if such amounts were received by the
Agent. Foothill agrees that Foothill shall transfer any such amounts to the
Agent. To the extent that it is required to accomplish the allocation of payment
intended hereby, each Lender shall purchase and Foothill shall sell, without
representation or warranty of any kind, participations in the rights under such
Pledge Agreements.

                                      106
<PAGE>

     13.11 Actions with Respect to Defaults.
           --------------------------------

          In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Required
Lenders or all of the Lenders, as the case may be; provided that, until the
                                                   --------
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and in the best
interests of the Lenders.

     13.12 Delivery of Information.
           -----------------------

          The Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from the Borrower, any Subsidiary, the
Required Lenders, any Lender or any other Person under or in connection with
this Credit Agreement or any other Credit Document except (a) as specifically
provided in this Credit Agreement or any other Credit Document and (b) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of the Agent at the time of receipt of such
request and then only in accordance with such specific request.

     13.13 Wells Fargo as Lead Arranger and Syndication Agent. Wells Fargo shall
           --------------------------------------------------
not have any rights, powers, duties or responsibilities hereunder or any other
Credit Document in its capacity as Lead Arranger and Syndication Agent and no
implied rights, powers, duties or responsibilities shall be read into this
Credit Agreement or any other Credit Document or otherwise exist on behalf of or
against Wells Fargo in its capacity as Lead Arranger and Syndication Agent.

                                  ARTICLE XIV.

                                  MISCELLANEOUS

     14.1 Waivers.
          -------

          The Borrower hereby waives due diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No delay or
omission of the Agent or the Lenders to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by the Agent or the Lenders of any
right or remedy shall preclude any other or further exercise thereof, or
preclude any other right or remedy.

     14.2 JURY TRIAL.
          ----------

          TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER, THE AGENT AND
THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS CREDIT

                                      107
<PAGE>

AGREEMENT, THE CREDIT DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED
HERETO OR THERETO.

     14.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
          ------------------------------------------------

          (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. Any legal action or proceeding with respect to this Credit Agreement or
any other Credit Document shall be brought in the courts of the State of New
York in New York County or of the United States for the Southern District of New
York, and, by execution and delivery of this Credit Agreement, the Borrower
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the nonexclusive jurisdiction of such courts. The Borrower
hereby agrees that service of all writs, process and summonses in any suit,
action or proceeding brought in the State of New York may be made upon CT
Corporation, presently located at 111 Eighth Avenue, New York, New York 10011,
U.S.A. (the "Process Agent"), and the Borrower hereby confirms and agrees that
the Process Agent has been duly and irrevocably appointed as its agent and true
and lawful attorney-in-fact in its name, place and stead to accept such service
of any and all such writs, process and summonses, and agrees that the failure of
the Process Agent to give any notice of any such service of process to such
Obligor shall not impair or affect the validity of such service or of any
judgment based thereon. The Borrower further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
                                                                      -------
14.5, such service to become effective three (3) days after such mailing.
----
Nothing herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law or to commence legal proceedings or
to otherwise proceed against the Borrower in any other jurisdiction.

          (b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Credit Agreement or any
other Credit Document brought in the courts referred to in subsection (a) above
                                                           -------------
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

     14.4 [Intentionally Deleted].
           ----------------------

     14.5 Notices.
          -------

          Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent, then to Foothill Capital Corporation, 2450 Colorado Avenue,
Suite 3000 West, Santa Monica, California 90404, Attention: Loan Portfolio
Manager, with a copy to Latham & Watkins, 233 S. Wacker Drive, Chicago, Illinois
60606, Attention: Donald Schwartz, Esq., if to the Borrower, then to Borrower at
Chiquita Brands, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202, Attention
to each of:

                                      108
<PAGE>

Chief Financial Officer and General Counsel, if to a Lender at the address set
forth on Schedule 1.1A hereto, or by facsimile transmission, promptly confirmed
         -------------
in writing sent by first class mail, if to the Agent, at (310) 453-7413, with a
copy to Latham & Watkins at (312) 993-9767 and if to the Borrower at (513)
784-6690 and (513) 784-6691 and if to any Lender at the facsimile number set
forth on Schedule 1.1A hereto. All such notices and correspondence shall be
         -------------
deemed given (i) if sent by certified or registered mail, three (3) Business
Days after being postmarked, (ii) if sent by overnight delivery service, when
received at the above stated addresses or when delivery is refused and (iii) if
sent by facsimile transmission, when receipt of such transmission is
acknowledged; provided that notices to the Agent shall not be effective until
received.

     14.6 Assignability.
          -------------

          (a) The Borrower shall not have the right to assign this Credit
Agreement or any interest therein except with the prior written consent of the
Lenders.

          (b) Notwithstanding subsection (c) of this Section 14.6, nothing
                              -------------          ------------
herein shall restrict, prevent or prohibit any Lender from (i) pledging its
Loans hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank or (ii) granting assignments or
participations in such Lender's Loans and/or Commitments hereunder to its parent
company and/or to any affiliate of such Lender or to any existing Lender or
affiliate thereof. Any Lender may make, carry or transfer Loans at, to or for
the account of, any of its branch offices or the office of an affiliate of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.

          (c) Each Lender may, with the consent of the Agent (such consent not
to be unreasonably withheld, conditioned or delayed and such consent shall not
be required in connection with any assignment by a Lender to its Affiliates or
managed funds or managed accounts (an "Exempt Assignment") or in connection with
                                       -----------------
a sale of all or a material portion of the loan portfolio of such Lender (a
"Portfolio Sale")), but without the consent of any other Lender or other Person,
 --------------
assign to one or more Persons all or a portion of its rights and obligations
under this Credit Agreement and the Notes; provided that (i) for each such
                                           --------
assignment, the parties thereto shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500 to be paid by the assignee (such fee
being waived in the case of an Exempt Assignment), (ii) no such assignment shall
be for less than $5,000,000 or, if less, the entire remaining Commitments of
such Lender, (iii) if such assignee is a Foreign Lender, all of the requirements
of Section 2.7(b) shall have been satisfied as a condition to such assignment
   --------------
and (iv) other than in connection with an Exempt Assignment, each such
assignment shall be of a uniform, and not a varying, percentage of all rights
and obligations under and in respect of the Commitments and all Loans of such
Lender; provided, additionally, that, other than pursuant to a Portfolio Sale,
        --------  ------------
no Initial Lender shall have the right to make any such assignment and
delegation if, immediately after giving effect thereto, such Lender's Pro Rata
Share (plus the Pro Rata Share of such Lender's Affiliates and the funds and
accounts managed by such Lender or one or more of its Affiliates) of the sum of
the principal amount of the then outstanding Term Loans plus the Revolving
Credit Committed Amount at such time would be less than the lesser of (i)
$20,000,000 or (ii) one-sixth of the principal amount of the then outstanding
Term Loans plus the Revolving Credit

                                      109
<PAGE>

Committed Amount at such time; provided, additionally, that, as long as no
                               --------  ------------
Default or Event of Default has occurred and is continuing, and other than to an
Affiliate of such Lender (or a fund or amount managed by such Lender or one or
more of its Affiliates), no Lender shall have the right to make any such
assignment and delegation to any entity which is not a financial institution or
other entity which is not generally engaged in the business of buying, selling
or funding transactions of the type contemplated hereby. Upon such execution and
delivery of the Assignment and Acceptance to the Agent, from and after the date
specified as the effective date in the Assignment and Acceptance (the
"Acceptance Date"), (x) the assignee thereunder shall be a party hereto, and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, such assignee shall have the rights
and obligations of a Lender hereunder and (y) the assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other than
any rights it may have pursuant to Section 14.8 which will survive) and be
                                   ------------
released from its obligations under this Credit Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Credit Agreement, such
Lender shall cease to be a party hereto).

          (d) By executing and delivering an Assignment and Acceptance, the
assignee thereunder confirms and agrees as follows: (i) other than as provided
in such Assignment and Acceptance, the assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the Notes or any other instrument
or document furnished pursuant hereto, (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under this Credit Agreement or any other
instrument or document furnished pursuant hereto, (iii) such assignee confirms
that it has received a copy of this Credit Agreement, together with copies of
the financial statements referred to in Section 7.1 and such other documents and
                                        -----------
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Credit Agreement, (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Credit Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement are required
to be performed by it as a Lender.

          (e) The Agent shall maintain at its address referred to in Section
                                                                     -------
14.5 a copy of each Assignment and Acceptance delivered to and accepted by it
----
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Credit Agreement. The Register and

                                      110
<PAGE>

copies of each Assignment and Acceptance shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

          (f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with the Note or Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit B hereto, (i) accept such Assignment and
                          ---------
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five (5) Business Days
after its receipt of such notice, the Borrower shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes (which the assigning Lender
agrees to promptly deliver to the Borrower) a new Note or Notes to the order of
the assignee in an amount equal to the Commitment or Commitments assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment or Commitments hereunder, a new Note or Notes to the order
of the assigning Lender in an amount equal to the Commitment or Commitments
retained by it hereunder. Such new Note or Notes shall re-evidence the
indebtedness outstanding under the old Notes or Notes and shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the Closing Date and shall otherwise
be in substantially the form of the Note or Notes subject to such assignments.

          (g) Each Lender may sell participations (without the consent of the
Agent, the Borrower or any other Lender) to one or more parties in or to any
portion of its rights and obligations under this Credit Agreement (including,
without limitation, any portion of its Commitments, the Loans owing to it and
the Note or Notes held by it); provided that (i) such Lender's obligations under
                               --------
this Credit Agreement (including, without limitation, its Commitments to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Credit Agreement, (iv) the Borrower, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Credit Agreement and (v) such Lender
shall not transfer, grant, assign or sell any participation under which the
participant shall have rights to approve any amendment or waiver of this Credit
Agreement except to the extent such amendment or waiver would (A) extend the
final maturity date or the date for the payments of any installment of fees or
principal or interest of any Loans or Letter of Credit reimbursement obligations
in which such participant is participating, (B) reduce the amount of any
installment of principal of the Loans or Letter of Credit reimbursement
obligations in which such participant is participating, (C) except as otherwise
expressly provided in this Credit Agreement, reduce the interest rate applicable
to the Loans or Letter of Credit reimbursement obligations in which such
participant is participating, or (D) except as otherwise expressly provided in
this Credit Agreement, reduce any Fees payable hereunder.

          (h) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment or sell a participation
hereunder in any manner or under any circumstances that would require
registration or qualification of, or filings in respect of, any Loan, Note or
other Obligation under the securities laws of the United States of America or of
any jurisdiction.

                                       111
<PAGE>

          (i) In connection with the efforts of any Lender to assign its rights
or obligations or to participate interests, such Lender may disclose any
information in its possession regarding the Borrower.

          (j) Borrower shall maintain, or cause to be maintained, a register
(the "Register") on which it enters the name of each Lender as the registered
owner of the Loans held by such Lender. A Registered Loan (and the Registered
Note, if any, evidencing the same) may be assigned or sold in whole or in part
only by registration of such assignment or sale on the Register (and each
Registered Note shall expressly so provide). Any assignment or sale of all or
part of such Registered Loan (and the Registered Note, if any, evidencing the
same) may be effected only by registration of such assignment or sale on the
Register, together with the surrender of the Registered Note, if any, evidencing
the same duly endorsed by (or accompanied by a written instrument of assignment
or sale duly executed by) the holder of such Registered Note, whereupon, at the
request of the designated assignee(s) or transferee(s), one or more new
Registered Notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). Prior to the registration of assignment
or sale of any Registered Loan (and the Registered Note, if any evidencing the
same), Borrower shall treat the Person in whose name such Loan (and the
Registered Note, if any, evidencing the same) is registered as the owner thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.

          (k) In the event that any Lender sells participations in the
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
                                                                  -----------
Register"). A Registered Loan (and the Registered Note, if any, evidencing the
--------
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Note shall
expressly so provide). Any participation of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.

     14.7 Information.
          -----------

          The Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by the Borrower
pursuant to this Credit Agreement that is marked confidential; provided that
                                                               --------
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending Party or affiliate
of any Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority;
provided, however, that, to the extent permitted by law, the affected Lending
--------  -------
Party shall provide prior written notice to the Borrower of any such request or
demand, (f) that is or becomes available to the public or that is or becomes
available to any Lending Party other than as a result of a disclosure by any
Lending Party prohibited by this Credit Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Credit Agreement or any other Credit Document, (i) subject to provisions

                                      112
<PAGE>

substantially similar to those contained in this Section 14.7, to any actual or
proposed participant or assignee and (j) to Gold Sheets and other similar bank
trade publications; such information to consist of deal terms and other
information approved by the Borrower and customarily found in such publications.

     14.8 Payment of Expenses; Indemnification.
          ------------------------------------

          The Borrower agrees to pay, upon demand, all reasonable out-of-pocket
costs and expenses of (a) the Agent and each Lender in connection with (i) the
negotiation, preparation, execution and delivery of this Credit Agreement and
the other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of special
external counsel to the Agent and special external counsel to the Lenders and
the fees and expenses of special external counsel for the Agent in connection
with collateral issues but excluding any amounts for services rendered by
internal counsel) and (ii) any amendment, waiver or consent relating hereto and
thereto including, without limitation, any such amendments, waivers or consents
resulting from or related to any work-out, re-negotiation or restructure
relating to the performance by the Borrower under this Credit Agreement and (b)
the Agent and each Lender in connection with enforcement of the Credit Documents
and the documents and instruments referred to therein, including but not limited
to, any work-out, re-negotiation or restructure relating to the performance by
the Borrower under this Credit Agreement, including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Agent and each of the Lenders (including the allocated costs of
internal counsel). In addition, the Borrower agrees to pay, upon demand, for the
separate account of Agent, audit, appraisal, and valuation fees and charges as
follows: (i) a fee of $750 per day, per auditor, plus out-of-pocket expenses for
each financial audit performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, (iii)
a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iv)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits, to appraise the
Collateral, or any portion thereof, or to assess the Borrower's (or any of its
Subsidiaries') business valuation. The Borrower shall indemnify, defend and hold
harmless the Agent, the Issuing Bank and each of the Lenders and their
respective directors, officers, agents, employees and counsel from and against
(x) any and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is finally
judicially determined to have resulted from their own gross negligence or
willful misconduct) arising out of or by reason of any litigation,
investigation, claim or proceeding which arises out of or is in any way related
to (i) this Credit Agreement, any Letter of Credit or the transactions
contemplated thereby, (ii) any actual or proposed use by the Borrower of the
proceeds of the Loans or (iii) the Agent's, the Issuing Bank's or the Lenders'
entering into this Credit Agreement, the other Credit Documents or any other
agreements and documents relating hereto, including, without limitation, amounts
paid in settlement, court costs and the fees and disbursements of counsel
incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing and
(y) any such losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred in connection with any remedial or other action taken by the
Borrower or any of the Lenders in connection with compliance by the Borrower or
any of its Subsidiaries, or any

                                      113
<PAGE>

of their respective properties, with any federal, state or local environmental
laws, acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines. If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The Borrower's obligations under this Section
                                                                        -------
14.8 shall survive any termination of this Credit Agreement and the other Credit
----
Documents and the payment in full of the Obligations, and are in addition to,
and not in substitution of, any other of their Obligations set forth in this
Credit Agreement. In addition, the Borrower shall, upon demand, pay to the Agent
and any Lender all costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by the Agent,
the Issuing Bank or such Lender in (A) enforcing or defending its rights under
or in respect of this Credit Agreement, the other Credit Documents or any other
document or instrument now or hereafter executed and delivered in connection
herewith against the Borrower (or, in the case of the Agent, against any Lender,
except to the extent that the claim or liability giving rise to such enforcement
or defense is finally judicially determined to have resulted from the Agent's
own gross negligence or willful misconduct), (B) in collecting the Loans, (C) in
foreclosing or otherwise collecting upon the Collateral or any part thereof and
(D) obtaining any legal, accounting or other advice in connection with any of
the foregoing.

     14.9 Entire Agreement, Successors and Assigns.
          ----------------------------------------

          This Credit Agreement along with the other Credit Documents and the
Fee Letter constitutes the entire agreement among the Borrower, the Agent and
the Lenders, supersedes any prior agreements among them, and shall bind and
benefit the Borrower and the Lenders and their respective successors and
permitted assigns, provided, however, that the foregoing shall not affect the
continuing effectiveness of any waiver of any provision of the Original Credit
Agreement heretofore granted to the Borrower.

     14.10 Amendments, Etc.
           ---------------

          Neither the amendment or waiver of any provision of this Credit
Agreement or any other Credit Document, nor the consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, or if the Lenders shall not be
parties thereto, by the parties thereto and consented to by the Required
Lenders, and each such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
                                                                    --------
that no amendment, waiver or consent shall unless in writing and signed by all
the Lenders, do any of the following: (a) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (b) except as
otherwise expressly provided in this Credit Agreement, reduce the principal of,
or interest on, any Note or any Letter of Credit reimbursement obligations or
any fees hereunder, (c) postpone any date fixed for any payment or mandatory
prepayment in respect of principal of, or interest on, any Note or any Letter of
Credit reimbursement obligations or any fees hereunder, (d) change the
percentage of the Commitments, or any minimum requirement necessary for the
Lenders or the Required Lenders to take any action hereunder, (e) amend or waive
Section 2.8, Section 2.9, Section 13.6 or this Section 14.10, or change the
-----------  -----------  ------------         -------------
definition of Required Lenders, (f) except as otherwise expressly provided in
this Credit Agreement, and other than in connection with the financing,
refinancing, sale or other disposition of any asset of the Borrower permitted

                                      114
<PAGE>

under this Credit Agreement, release any Liens in favor of the Lenders on any
material portion of the Collateral, (g) except as expressly permitted hereunder,
increase the advance rates used to calculate the Revolving Credit Borrowing Base
or the terms used in the calculation thereof, or (h) terminate, waive or modify
any indemnification obligations of the Borrower under the Credit Agreement or
any other Credit Document and, provided, further, that no amendment, waiver or
                               --------  -------
consent affecting the rights or duties of the Agent or the Issuing Bank under
any Credit Document shall in any event be effective, unless in writing and
signed by the Agent and/or the Issuing Bank, as applicable, in addition to the
Lenders required hereinabove to take such action. Notwithstanding any of the
foregoing to the contrary, the consent of the Borrower shall not be required for
any amendment, modification or waiver of the provisions of Article XIII (other
                                                           ------------
than the provisions of Section 13.9). In addition, the Borrower and the Lenders
                       ------------
hereby authorize the Agent to modify this Credit Agreement by unilaterally
amending or supplementing Schedule 1.1A from time to time in the manner
                          -------------
requested by the Borrower, the Agent or any Lender in order to reflect any
assignments or transfers of the Loans as provided for hereunder; provided,
                                                                 --------
however, that the Agent shall promptly deliver a copy of any such modification
-------
to the Borrower and each Lender.

     14.11 Nonliability of Agent and Lenders.
           ---------------------------------

          The relationship between the Borrower on the one hand and the Lenders
and the Agent on the other hand shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Agent nor any Lender undertakes any responsibility to
the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations.

     14.12 Independent Nature of Lenders' Rights.
           -------------------------------------

          The amounts payable at any time hereunder to each Lender under such
Lender's Note or Notes shall be a separate and independent debt.

     14.13 Counterparts.
           ------------

          This Credit Agreement may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.

     14.14 Effectiveness.
           -------------

          This Credit Agreement shall become effective on the date on which all
of the parties have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent pursuant to Section 14.5 or, in
                                                           ------------
the case of the Lenders, shall have given to the Agent written, telecopied or
telex notice (actually received) at such office that the same has been signed
and mailed to it.

     14.15 Severability.
           ------------

          In case any provision in or obligation under this Credit Agreement or
the Notes or the other Credit Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the

                                      115
<PAGE>

validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

     14.16 Headings Descriptive.
           --------------------

          The headings of the several sections and subsections of this Credit
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Credit Agreement.

     14.17 Maximum Rate.
           ------------

          Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrower, the Agent and
the Lenders hereby agree that all agreements among them under this Credit
Agreement and the other Credit Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Agent or any Lender for the use, forbearance, or detention of the money
loaned to the Borrower and evidenced hereby or thereby or for the performance or
payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance any Lender should ever receive anything
of value deemed interest by applicable law which would exceed the Highest Lawful
Rate, such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the Borrower. All
sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other indebtedness of the
Borrower to the Agent or any Lender shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest on
account of all such indebtedness does not exceed the Highest Lawful Rate
throughout the entire term of such indebtedness. The terms and provisions of
this Section shall control every other provision of this Credit Agreement and
all agreements among the Borrower, the Agent and the Lenders.

     14.18 Right of Setoff.
           ---------------

          In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Note may have under applicable law, each Lender or
other holder of a Note shall, if any Event of Default has occurred and is
continuing and whether or not such Lender or such holder has made any demand or
the Obligations of the Borrower have matured, have the right to appropriate and
apply to the payment of the Obligations of the Borrower all deposits (general or
special, time or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such Lender or other
holder. Any amount received as a

                                      116
<PAGE>

result of the exercise of such rights shall be reallocated among the Lenders as
set forth in Section 3.8.
             -----------

     14.19 Power of Attorney.
           -----------------

          Each Subsidiary of the Borrower appoints the chief accounting officer
and any vice president of the Borrower, (each of whom is a senior officer of the
Borrower) to be its attorneys ("its Attorneys") and in its name and on its
behalf and as its act and deed or otherwise to sign all documents and carry out
all such acts as are necessary or appropriate in connection with executing any
Notice of Borrowing, any Revolving Credit Borrowing Base Certificate or any
security documents (the "Documents") in connection with this Credit Agreement,
provided that such Documents are in substantially the form provided therefor in
--------
the applicable exhibits thereto. This Power of Attorney shall be valid for the
duration of the term of this Credit Agreement. Each Subsidiary of the Borrower
hereby undertakes to ratify everything which either of its Attorneys shall do in
order to execute the Documents mentioned herein.

     14.20 Restatement of Original Credit Agreement
           -----------------------------------------

          The parties hereto agree that, on the Closing Date, the following
transactions shall be deemed to occur automatically, without further action by
any party hereto:

          (a) the Original Credit Agreement shall be deemed to be amended and
restated in its entirety in the form of this Agreement (provided that the
foregoing shall not be deemed or otherwise construed to constitute a waiver of
any Default or Event of Default under this Credit Agreement or the Original
Credit Agreement to the extent not previously waived);

          (b) all Original Obligations outstanding on the Closing Date
(including without limitation all accrued and unpaid principal, interest and
fees) shall, to the extent not paid on the Closing Date, be deemed to be
Obligations outstanding hereunder;

          (c) the Guaranties and Security Documents, including the Liens created
thereunder, and securing payment of the Original Obligations, shall remain in
full force and effect with respect to the Obligations and are hereby reaffirmed;
and

          (d) all references in the other Credit Documents to the Original
Credit Agreement shall be deemed for all time periods after the date hereof to
refer without further amendment to this Credit Agreement as the same may be
amended, restated, supplemented, renewed or otherwise modified from time to
time.

          The parties acknowledge and agree that this Credit Agreement and the
other Credit Documents do not constitute a novation, payment and reborrowing or
termination of the Original Obligations and that all such Original Obligations
are in all respects continued and outstanding as Obligations under this Credit
Agreement and the Notes with only the terms being modified from and after the
effective date of this Agreement as provided in this Agreement, the Notes and
the other Credit Documents.

                                      117
<PAGE>

          IN WITNESS WHEREOF the parties hereto have caused this Credit
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.

BORROWER               CHIQUITA BRANDS, INC.
--------

                       By: /s/ James B. Riley
                           -----------------------------------------------------
                       Name:  James B. Riley
                       Title: Senior Vice President and Chief Financial Officer

AGENTS AND LENDERS     FOOTHILL CAPITAL CORPORATION,
------------------     as Agent and as a Lender

                       By: /s/ James Callas
                           -----------------------------------------------------
                       Name:  James Callas
                       Title: Vice President

                       WELLS FARGO BANK, NATIONAL ASSOCIATION,
                       as Lead Arranger, Syndication Agent and as a Lender

                       By: /s/ David E. Wilsdorf
                           -----------------------------------------------------
                       Name:  David E. Wilsdorf
                       Title: Vice President

LENDERS                ABLECO FINANCE LLC, for itself and its affiliated
-------                assignees, as a Lender

                       By: /s/ Kevin Genda
                           -----------------------------------------------------
                       Name:  Kevin Genda
                       Title: Chief Credit Officer

          [Signature Page to the Amended and Restated Credit Agreement]
<PAGE>

                       PNC BANK, National Association,
                       as a Lender

                       By: /s/ Bruce A. Kintner
                           -----------------------------------------------------
                       Name:  Bruce A. Kintner
                       Title: Vice President

         [Signature Page to the Amended and Restated Credit Agreement]
<PAGE>

                                  Schedule 1.1A

                             Lenders and Commitments

LENDER                                                   COMMITMENT
------                                                   ----------

Foothill Capital Corporation                             $43,500,000
2450 Colorado Avenue
Suite 3000W
Santa Monica, California 90404
Facsimile Number:  (310) 453-7412
Wiring Instructions:
                       ---------------------

Wells Fargo Bank, National Association                   $6,500,000

--------------------------------------------

--------------------------------------------
Facsimile Number:
                       ---------------------
Wiring Instructions:
                       ---------------------

Ableco Finance LLC,                                      $50,000,000
for itself and its affiliated assignees
450 Park Avenue
New York, New York 10022
Facsimile Number:  (212) 891-1541
Wiring Instructions:
                       ---------------------

Oak Hill Securities Fund, L.P.                           $12,500,000
65 East 55th Street - 32nd Floor
New York, New York  10022
Facsimile Number:  (212) 593-3596
Wiring Instructions:
                       ---------------------
(Purchased through Assignment)

Oak Hill Securities Fund II, L.P.                        $12,500,000
65 East 55th Street - 32nd Floor
New York, New York  10022
Facsimile Number:  (212) 593-3596
Wiring Instructions:
                      ----------------------
(Purchased through Assignment)

PNC Bank, N.A.                                           $5,000,000
201 East Fifth Street
Cincinnati, Ohio  45202
Facsimile Number:  (513) 651-8951
Wiring Instructions:
                      ----------------------

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