Document:

SETTLEMENT AGREEMENT

         AGREEMENT  dated as of May 12,  2000 by and among  F&A Dairy  Products,
Inc.,  a Wisconsin  corporation  ("F&A"),  Ferro Foods  Corporation,  a New York
corporation ("Ferro"), Frank Gambino ("FG"), Frank Ferro, Sr. ("FF") and Liberty
Food Group, LLC, a Delaware limited liability company ("Liberty").

                              W I T N E S S E T H :

         WHEREAS,  a motion for a temporary  restraining  order was filed by F&A
against Ferro and Liberty in the United States District Court,  Western District
of Wisconsin on February  22, 2000 (the  "Action"),  a copy of which is attached
thereto as Exhibit A;

         WHEREAS, the parties hereto agreed to settle the Action pursuant to the
terms and provisions of a letter agreement dated February 25, 2000 from Herrick,
Feinstein LLP, counsel to Liberty, to Winthrop & Weinstine, P.A., counsel to F&A
(the "Letter  Agreement"),  a copy of which is attached hereto as Exhibit B, and
to incorporate the terms and provisions of the Letter  Agreement into definitive
settlement documentation;

         WHEREAS, the parties acknowledge that prior to the date hereof, the sum
of  $100,000  has  been  paid  to  F&A to be  credited  towards  payment  of the
outstanding balance owed by Ferro to F&A (the "Prior Payment");

         WHEREAS,  Liberty,  Ferro, FG, FF and F&A desire to settle, and resolve
the pending  Action and any  outstanding  claims and disputes and other  matters
related to the dealings  among them,  and to confirm the terms and provisions of
the Letter  Agreement in this  Agreement  and the  agreements  attached  hereto,
subject to the terms and conditions hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the mutual  promises  contained
herein and other good and valuable  consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

1.        Settlement.

          Simultaneously upon the execution of this Agreement (the "Closing"):

          1.        Ferro shall  execute and  deliver a  promissory  note in the
                    principal amount of  $1,063,123.09  (taking into account the
                    Prior  Payment  and the  payment  being made  simultaneously
                    herewith  under  Section  A.1.  above)  in favor of F&A (the
                    "Note"), in the form attached hereto as Exhibit C;

          2.        Liberty shall execute and deliver to F&A a Limited Guaranty,
                    in the form attached hereto as Exhibit D;

<PAGE>

          3.        FG and FF, as  principals  of Ferro,  shall each execute and
                    deliver to F&A,  a Personal  Guaranty  of all  payments  due
                    under the Note,  in the form  attached  hereto as Exhibit E.
                    Additionally, FG and FF shall pay to F&A upon the earlier to
                    occur of (i) the expiration of the term of the Note or, (ii)
                    the closing of the Real Estate  Transactions  (as defined in
                    Section C.1. below), the amount of $__________, representing
                    interest on the  $1,717,310 at the rate of 9% per annum from
                    January 1, 2000 until the date hereof;

          4.        Ferro shall execute and deliver a Stock Pledge  Agreement in
                    favor of F&A,  securing  the  Note by a  pledge  of stock of
                    Liberty  Group  Holdings,  Inc.  ("Holdings"),  in the  form
                    attached hereto as Exhibit F;

          5.        F&A and Liberty shall execute and deliver a Label Repurchase
                    Agreement, in the form attached hereto as Exhibit G;

          6.        F&A will cause their counsel to execute and immediately file
                    a stipulation  dismissing  and  withdrawing  the Action with
                    prejudice, in the form attached hereto as Exhibit H.

2.        Business Dealings.

          1.        During  the  four  (4) week  period  commencing  on the date
                    hereof, F&A shall be entitled to receive from Liberty,  on a
                    weekly basis,  a payment to be credited  against the Note in
                    the amount of the greater of (i) $100,000 or (ii) the amount
                    owed for the  actual  order  delivered  and  shipped  by F&A
                    during each such week.

          2.        From and after the date hereof until May 1, 2000,  F&A shall
                    supply  Liberty for all orders placed by Liberty to F&A on a
                    30-day credit basis. From and after May 1, 2000, such credit
                    terms shall be reduced to a 21-day payment term.

          3.        Commencing  on May 1,  2000 and  continuing  for all  orders
                    placed  until May 31,  2000,  Liberty  shall be  entitled to
                    receive  from F&A a $.02 per pound  discount  on all  orders
                    placed  with F&A other  than with  respect to orders for the
                    Dan Palo label;  provided,  however,  that if at the time of
                    placing  the order,  Liberty is not  current in its  payment
                    obligations  to  F&A,  no  discount  will  be  available  to
                    Liberty.

3.        Available Proceeds; Collateral

          1.        Upon the financing of any Real Estate  Transactions (as such
                    term is defined below), the available proceeds from any such
                    Transaction  shall  be used  first to pay the  creditors  of
                    Ferro,  including Liberty and F&A, pro ratably in proportion
                    to their respective debts,  which shall not be less than 50%
                    of the  proceeds to F&A.  "Real Estate  Transactions"  shall
                    mean  the  re-financing  of  real  properties  owned  by the
                    principals  of Ferro  and  their  affiliates  and/or  family
                    members ("Ferro  Principals") in Brooklyn,  New York and New
                    Jersey, after the second Medallion financing transaction.

          2.        Upon the financing and/or  hypothecation of any transactions
                    with  respect  to the  stock of  Holdings  which was paid to
                    Ferro  as  consideration  for  its  assets,   the  available
                    proceeds shall be used to pay creditors of Ferro,  including
                    Liberty  and  F&A,  pro  ratably  in   proportion  to  their
                    respective debts. 1.

<PAGE>

          3.        F&A shall become a mortgagee on the real estate owned by the
                    Ferro Principals,  including  without  limitation the Queens
                    and Brooklyn parcels, as set forth on Schedule 1 hereto. F&A
                    acknowledges  that Liberty has a $1,000,000  unfiled  credit
                    line  mortgage  which may be filed at anytime  against  said
                    real estate.

4.        Confidentiality.

                    The  parties  acknowledge  and agree  that the terms of this
          settlement and all documents  relating  thereto are  confidential  and
          hereby covenant and agree that they, or any entity which they control,
          shall not  disclose,  directly or  indirectly,  to any third party the
          terms of this  Agreement or any matter or  information  relating to or
          concerning this Agreement and all discussions and information provided
          in connection  herewith and said matters and information shall be kept
          strictly  confidential,  except as required by applicable law, rule or
          regulation.

5.        Representations and Warranties.

          1.        Each party hereto  represents  and warrants  that (i) it has
                    the full power and  authority  to enter into this  Agreement
                    and to execute and deliver all other documents in connection
                    herewith,  and the  execution,  delivery and  performance of
                    this  Agreement and such other  documents by such party will
                    not  violate  the  certificate  of  incorporation,  by-laws,
                    limited  liability  agreement or certificate of formation of
                    any such  party or any other  agreement  affecting  any such
                    party or any law, rule,  order,  ordinance or statute of any
                    governmental  authority having jurisdiction over such party;
                    and (ii) the  person  signing  below on behalf of such party
                    represents  that he is an officer of such entity and that he
                    has been  authorized  to enter into this  Agreement,  and to
                    execute all documents in connection herewith, and to do such
                    other acts and things as may be necessary or appropriate for
                    and consistent  with carrying out the intent and purposes of
                    this Agreement.

          2.        Liberty  represents and warrants that during the term of the
                    Note,  it will  not  sell,  assign,  transfer  or  otherwise
                    dispose of all or  substantially  all of its  assets,  other
                    than in the ordinary course of its business.

6.        Further Assurances

                    Each  of the  parties  hereto  agree  to do such  other  and
          further acts and things,  and to execute and deliver such  instruments
          and  documents  at any time after the date hereof as any party  hereto
          may  reasonably  request to effect the purposes and provisions of this
          Agreement.

7.        General

          1.        This Agreement may be executed in two or more  counterparts,
                    each of which shall constitute on original, but all of which
                    when  taken  together  shall  constitute  one and  the  same
                    instrument.
<PAGE>
          2.        This  Agreement  shall be construed in  accordance  with and
                    governed by the laws of the State of New York without regard
                    to conflict of law principles.

          3.        This  Agreement  shall  be  binding  upon  and  inure to the
                    benefit  of  the  parties,   and  their  respective   heirs,
                    successors, personal representatives, and assigns.

          4.        This Agreement and the Letter Agreement  contains the entire
                    agreement  between  the parties  hereto with  respect to the
                    matters   contemplated   herein  and  supercedes  all  prior
                    agreements or  understandings  among the parties  related to
                    the subject matter herein.

          5.        No change or  modification of this Agreement shall be valid,
                    binding or  enforceable  as a party  hereto  unless the same
                    shall be in writing and signed by the parties hereto.

          6.        If any  provision  of  this  Agreement  or  the  application
                    thereof to any party or  circumstance  shall be held invalid
                    or  unenforceable  to any  extent,  the  remainder  of  this
                    Agreement  and the  application  of such  provisions  to the
                    other parties or circumstances shall not be effected thereby
                    and shall be enforced to the  greatest  extent  permitted by
                    applicable law.

<PAGE>

                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Agreement as of the date first written above.

                                                     FERRO FOODS CORPORATION

                                              By:  /s/______________________
                                            Name:  Frank Ferro, Sr.,
                                           Title:  President

                                                     LIBERTY FOOD GROUP, LLC

                                              By:  LIBERTY GROUP HOLDINGS, INC.,
                                                   Managing Member

                                              By:  /s/______________________
                                            Name:  Barry L. Hawk,
                                           Title:  President

                                                   F&A DAIRY PRODUCTS, INC.

                                              By:  /s/______________________
                                            Name:
                                           Title:

                                                   /s/
                                                  -----------------------------
                                                  Frank Ferro, Sr., Individually

                                                   /s/
                                                  -----------------------------
                                                  Frank Gambino, Individually

<PAGE>

                            INDIVIDUAL ACKNOWLEDGMENT

                                   STATE OF )
                                     ) ss.:
                                  COUNTY OF )

           On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction  aforesaid,  personally appeared Frank Ferro, Sr., personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within  agreement and acknowledged to me that by
his signature on the agreement, the individual executed the instrument.

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Signature and Office of individual
taking acknowledgment

[SEAL]

                            INDIVIDUAL ACKNOWLEDGMENT

                                   STATE OF )
                                     ) ss.:
                                  COUNTY OF )

           On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction aforesaid,  personally appeared Frank Gambino,  personally known to
me or proved to me on the basis of  satisfactory  evidence to be the  individual
whose name is subscribed to the within  agreement and acknowledged to me that by
his signature on the agreement, the individual executed the agreement.

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Signature and Office of individual
taking acknowledgment

[SEAL]

<PAGE>

                                 ACKNOWLEDGMENT

                                   STATE OF )
                                     : ss.:
                                  COUNTY OF )

           On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction  aforesaid,  personally appeared Frank Ferro, Sr., personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within  agreement and acknowledged to me that he
executed the same in his capacity,  on behalf of Ferro Foods Corporation,  a New
York  corporation  as the  President  thereof,  and that by his signature on the
agreement,  the  person or entity  upon  behalf of which the  individual  acted,
executed the agreement.

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Signature and Office of individual
taking acknowledgment

[SEAL]

<PAGE>

                                 ACKNOWLEDGMENT

                                   STATE OF )
                                     : ss.:
                                  COUNTY OF )

           On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction  aforesaid,  personally appeared Barry L. Hawk, personally known to
me or proved to me on the basis of  satisfactory  evidence to be the  individual
whose name is subscribed to the within  agreement and acknowledged to me that he
executed the same in his capacity, on behalf of Liberty Group Holdings,  Inc., a
Delaware  corporation,  and the managing  member of Liberty  Food Group,  LLC, a
Delaware limited liability company,  as the President  thereof,  and that by his
signature  on the  agreement,  the  person  or entity  upon  behalf of which the
individual acted, executed the agreement.

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Signature and Office of individual
taking acknowledgment

[SEAL]

<PAGE>
                                 ACKNOWLEDGMENT

                                   STATE OF )
                                     : ss.:
                                  COUNTY OF )

           On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction  aforesaid,  personally appeared , personally known to me or proved
to me on the basis of satisfactory  evidence to be the individual  whose name is
subscribed to the within  agreement and  acknowledged to me that he executed the
same  in  his  capacity,   on  behalf  of  F&A  Dairy  Products,   Inc.  as  the
____________________  [fill in capacity in which signing]  thereof,  and that by
his  signature on the  agreement,  the person or entity upon behalf of which the
individual acted, executed the agreement.

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Signature and Office of individual
taking acknowledgment

[SEAL]GUARANTY BY LIMITED LIABILITY COMPANY

                                                              Brooklyn, New York
                                                                    May 12, 2000

This  Guaranty,  dated  effective  as of May 12,  2000,  is made by Liberty Food
Group,  LLC, a Delaware limited  liability  company (the  "Guarantor"),  for the
benefit  of  F&A  Dairy  Products,  Inc.,  a  Wisconsin  corporation  (with  its
successors and assigns, the "Lender").

Ferro Foods Corporation,  a New York corporation (the "Borrower"),  has executed
and delivered a certain Term Note  effective as of April 1, 2000 in the original
principal  amount of  $1,063,123.09  and payable to the order of the Lender (the
"Note").

As a condition to accepting the Note,  the Lender has required the execution and
delivery of this Guaranty.

ACCORDINGLY,  the Guarantor, in consideration of the premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,   hereby  agrees  as  follows:

1. Indebtedness Guaranteed.  The Guarantor hereby absolutely and unconditionally
guarantees  to the  Lender  the full and  prompt  payment  when due,  whether at
maturity or earlier by reason of acceleration  or otherwise,  of the obligations
of the Borrower  under and pursuant to the Note (all of said  obligations  being
hereinafter called the "Indebtedness").

2.  Guarantor's  Representations  and Warranties.  The Guarantor  represents and
warrants to the Lender that (i) the  Guarantor is a limited  liability  company,
duly organized and existing in good standing and has full power and authority to
make and deliver this Guaranty; (ii) the execution,  delivery and performance of
this Guaranty by the Guarantor have been duly authorized by all necessary action
of its governors and members and do not and will not violate the  provisions of,
or constitute a default under,  any presently  applicable law or its articles of
organization  or operating  agreement or any member  control or other  agreement
presently  binding  on it;  (iii)  this  Guaranty  has been  duly  executed  and
delivered  by  the  authorized   managers  or  officers  of  the  Guarantor  and
constitutes its lawful, binding and legally enforceable obligation; and (iv) the
authorization,  execution,  delivery  and  performance  of this  Guaranty do not
require  notification  to,  registration  with,  or consent or approval  by, any
federal,  state or local regulatory body or administrative agency. The Guarantor
represents  and  warrants  to the  Lender  that the  Guarantor  has a direct and
substantial  economic interest in the Borrower's  affairs and that this Guaranty
is given for a company purpose. The Lender may rely conclusively on a continuing
warranty,  hereby  made,  that the  Guarantor  continues to be benefited by this
Guaranty  and the  Lender  shall have no duty to  inquire  into or  confirm  the
receipt  of any  such  benefits,  and  this  Guaranty  shall  be  effective  and
enforceable by the Lender without regard to the receipt,  nature or value of any
such benefits.

3. Unconditional Nature. No act or thing need occur to establish the Guarantor's
liability  hereunder,  and no act or thing, except full payment and discharge of
all of the Indebtedness,  shall in any way exonerate the Guarantor  hereunder or
modify, reduce, limit or release the Guarantor's liability hereunder. This is an
absolute,  unconditional and continuing  guaranty of payment of the Indebtedness
and shall continue to be in force and be binding upon the Guarantor,  whether or
not all of the  Indebtedness  is paid in full,  until this  Guaranty  is revoked
prospectively as to future transactions,  by written notice actually received by
the  Lender,  and such  revocation  shall not be  effective  as to the amount of
Indebtedness  existing or  committed  for at the time of actual  receipt of such
notice  by  the  Lender,  or as to any  renewals,  extensions,  refinancings  or
refundings thereof.

4.  Dissolution or Insolvency of Guarantor.  The  dissolution or adjudication of
bankruptcy of the Guarantor  shall not revoke this Guaranty,  except upon actual
receipt of written  notice thereof by the Lender and only  prospectively,  as to
future transactions, as herein set forth. If the Guarantor shall be dissolved or
shall be or become insolvent (however  defined),  then the Lender shall have the
right to declare  immediately due and payable,  and the Guarantor will forthwith
pay to the Lender,  the full amount of all of the  Indebtedness  whether due and
payable  or  unmatured.  If the  Guarantor  voluntarily  commences  or  there is
commenced  involuntarily  against the  Guarantor a case under the United  States
Bankruptcy Code, the full amount of all Indebtedness, whether due and payable or
unmatured,  shall be  immediately  due and  payable  without  demand  or  notice
thereof.

5. Limited  Guaranty.  Notwithstanding  the aggregate amount of the Indebtedness
which may from time to time be outstanding,  the Guarantor's liability hereunder
shall be limited to a  principal  amount  equal to the  principal  amount of the
Note, as reduced by the payments  described in the last sentence of Section 3 of
the Note,  plus accrued  interest  thereon and all attorneys'  fees,  collection
costs  and  enforcement   expenses  referable  thereto.   The  Indebtedness  may
thereafter be created and  continued in any amount,  whether or not in excess of
such principal amount,  without affecting or impairing the Guarantor's liability
hereunder,  and the Lender may pay (or allow for the  payment of) the excess out
of  any  sums  received  by or  available  to  the  Lender  on  account  of  the
Indebtedness from the Borrower or any other person (except the Guarantor),  from
their properties,  out of any collateral  security or from any other source, and
such payment (or allowance)  shall not reduce,  affect or impair the Guarantor's
liability hereunder.

6.  Subrogation.  The  Guarantor  will not  exercise  or  enforce  any  right of
contribution,  reimbursement, recourse or subrogation available to the Guarantor
as to any of the Indebtedness,  or against any person liable therefor,  or as to
any collateral security therefor, unless and until all of the Indebtedness shall
have been fully paid and discharged.

7. Enforcement Expenses.  The Guarantor will pay or reimburse the Lender for all
costs, expenses and reasonable attorneys' fees paid or incurred by the Lender in
endeavoring  to collect and  enforce  the  Indebtedness  and in  enforcing  this
Guaranty.

8.  Lender's  Rights.  The  Lender  shall  not be  obligated  by  reason  of its
acceptance  of this  Guaranty  to  engage  in any  transactions  with or for the
Borrower. Whether or not any existing relationship between the Guarantor and the
Borrower  has been  changed or ended and whether or not this  Guaranty  has been
revoked,  the Lender may enter into  transactions  resulting  in the creation or
continuance of the Indebtedness  and may otherwise  agree,  consent to or suffer
the creation or continuance of any of the  Indebtedness,  without any consent or
approval by the  Guarantor  and without  any prior or  subsequent  notice to the
Guarantor. The Guarantor's liability shall not be affected or impaired by any of
the following  acts or things  (which the Lender is expressly  authorized to do,
omit or suffer  from time to time,  both  before  and after  revocation  of this
Guaranty,  without consent or approval by or notice to the  Guarantor):  (i) any
acceptance of collateral security, guarantors, accommodation parties or sureties
for any or all of the  Indebtedness;  (ii) one or more extensions or renewals of
the  Indebtedness  (whether or not for longer than the  original  period) or any
modification of the maturities, if any, or other contractual terms applicable to
any of the  Indebtedness or any amendment or modification of any of the terms or
provisions of any loan agreement or other agreement under which the Indebtedness
or any part  thereof  arose;  (iii) any  waiver  or  indulgence  granted  to the
Borrower,  any delay or lack of diligence in the enforcement of the Indebtedness
or any failure to institute proceedings, file a claim, give any required notices
or otherwise protect any of the  Indebtedness;  (iv) any full or partial release
of,  compromise or settlement with, or agreement not to sue, the Borrower or any
guarantor or other person liable in respect of any of the Indebtedness;  (v) any
release,  surrender,  cancellation  or other  discharge  of any  evidence of the
Indebtedness  or the  acceptance of any  instrument  in renewal or  substitution
therefor;  (vi) any failure to obtain collateral  security  (including rights of
setoff) for the Indebtedness, or to see to the proper or sufficient creation and
perfection  thereof,  or to  establish  the  priority  thereof,  or to preserve,
protect,  insure, care for, exercise or enforce any collateral security;  or any
modification,   alteration,  substitution,  exchange,  surrender,  cancellation,
termination, release or other change, impairment,  limitation, loss or discharge
of any collateral security; (vii) any collection, sale, lease or disposition of,
or any other  foreclosure or  enforcement  of or realization  on, any collateral
security;  (viii)  any  assignment,  pledge  or  other  transfer  of  any of the
Indebtedness  or any  evidence  thereof;  (ix) any  manner,  order or  method of
application  of any  payments  or  credits  upon the  Indebtedness;  and (x) any
election by the Lender under  Section  1111(b) of the United  States  Bankruptcy
Code. The Guarantor  waives any and all defenses and  discharges  available to a
surety, guarantor or accommodation co-obligor.

9. Waivers by  Guarantor.  The Guarantor  waives any and all  defenses,  claims,
setoffs and discharges of the Borrower, or any other obligor,  pertaining to the
Indebtedness,  except the  defense  of  discharge  by  payment in full.  Without
limiting the generality of the foregoing,  the Guarantor will not assert,  plead
or enforce  against  the Lender any  defense of waiver,  release,  discharge  or
disallowance  in bankruptcy,  statute of limitations,  res judicata,  statute of
frauds, anti-deficiency statute, fraud, incapacity,  minority, usury, illegality
or  unenforceability  which may be available to the Borrower or any other person
liable in respect of any of the  Indebtedness,  or any setoff available  against
the Lender to the Borrower or any other such  person,  whether or not on account
of a related  transaction.  The  Guarantor  expressly  agrees that the Guarantor
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security  interest  securing  the  Indebtedness,  whether or not the
liability of the Borrower or any other obligor for such deficiency is discharged
pursuant to statute or judicial  decision.  The liability of the Guarantor shall
not be  affected  or  impaired  by any  voluntary  or  involuntary  liquidation,
dissolution,  sale  or  other  disposition  of all or  substantially  all of the
assets,  marshalling  of  assets  and  liabilities,   receivership,  insolvency,
bankruptcy,   assignment   for  the   benefit  of   creditors,   reorganization,
arrangement,   composition  or  readjustment  of,  or  other  similar  event  or
proceeding affecting,  the Borrower or any of its assets. The Guarantor will not
assert,  plead or  enforce  against  the  Lender  any  claim,  defense or setoff
available  to  the  Guarantor   against  the  Borrower.   The  Guarantor  waives
presentment, demand for payment, notice of dishonor or nonpayment and protest of
any  instrument  evidencing the  Indebtedness.  The Lender shall not be required
first to  resort  for  payment  of the  Indebtedness  to the  Borrower  or other
persons, or their properties,  or first to enforce,  realize upon or exhaust any
collateral  security  for the  Indebtedness,  before  enforcing  this  Guaranty.
Nothing  herein shall  constitute a waiver of any defense or claim  available to
the Guarantor against the Lender pursuant to that certain  Settlement  Agreement
of even date  herewith by and among the Lender,  the  Borrower,  the  Guarantor,
Frank Gambino and Frank Ferro, Sr. (the "Settlement  Agreement") or that certain
Label  Repurchase  Agreement of even date herewith by and between the Lender and
the Borrower (the "Repurchase Agreement").

10. If Payments  Set Aside,  etc.  If any  payment  applied by the Lender to the
Indebtedness  is thereafter  set aside,  recovered,  rescinded or required to be
returned  for  any  reason  (including,   without  limitation,  the  bankruptcy,
insolvency  or  reorganization  of the  Borrower  or  any  other  obligor),  the
Indebtedness  to which such  payment was  applied  shall for the purpose of this
Guaranty  be  deemed  to  have  continued  in  existence,  notwithstanding  such
application,  and this Guaranty shall be enforceable as to such  Indebtedness as
fully as if such application had never been made.

11.  Additional  Obligation of Guarantor.  The Guarantor's  liability under this
Guaranty is in addition to and shall be cumulative with all other liabilities of
the  Guarantor  to the  Lender as  guarantor,  surety,  endorser,  accommodation
co-obligor  or  otherwise  of any  of  the  Indebtedness  or  obligation  of the
Borrower,  without  any  limitation  as to  amount,  unless  the  instrument  or
agreement evidencing or creating such other liability  specifically  provides to
the contrary.

12. No Duties Owed by Lender.  The  Guarantor  acknowledges  and agrees that the
Lender (i) has not made any  representations or warranties with respect to, (ii)
does not assume any  responsibility  to the Guarantor for, and (iii) has no duty
to provide information to the Guarantor regarding,  the enforceability of any of
the  Indebtedness  or the financial  condition of the Borrower or any guarantor.
The Guarantor has independently  determined the creditworthiness of the Borrower
and the enforceability of the Indebtedness and until the Indebtedness is paid in
full will independently and without reliance on the Lender continue to make such
determinations.

13. Miscellaneous. This Guaranty shall be effective upon delivery to the Lender,
without  further act,  condition or acceptance  by the Lender,  shall be binding
upon the  Guarantor  and the  successors  and assigns of the Guarantor and shall
inure  to the  benefit  of the  Lender  and  its  successors  and  assigns.  Any
invalidity or  unenforceability of any provision or application of this Guaranty
shall not affect other lawful  provisions and application  thereof,  and to this
end the provisions of this Guaranty are declared to be severable.  This Guaranty
may not be waived, modified, amended, terminated,  released or otherwise changed
except by a writing signed by the Guarantor and the Lender.  This Guaranty shall
be governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of Minnesota.  The Guarantor  hereby (i) consents to
the personal  jurisdiction  of the state and federal courts located in the State
of Minnesota in connection with any controversy  related to this Guaranty;  (ii)
waives any argument that venue in any such forum is not convenient, (iii) agrees
that any litigation  initiated by the Lender or the Guarantor in connection with
this Guaranty shall be venued in either the District  Court of Hennepin  County,
Minnesota,  or the United States District Court,  District of Minnesota,  Fourth
Division;  and (iv)  agrees that a final  judgment  in any such suit,  action or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on the judgment or in any other manner provided by law.

14. Waiver of Jury Trial. THE GUARANTOR HEREBY  IRREVOCABLY WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, BASED ON
OR PERTAINING TO THIS GUARANTY.

IN WITNESS  WHEREOF,  this  Guaranty has been duly executed by the Guarantor the
date first written above.

                                        LIBERTY FOOD GROUP, LLC

                                        By /s/
                                           ----------------------------------
                                            Its
                                                -----------------------------

                             Address:
                                     -------------------------------
                                     -------------------------------
                                     -------------------------------
                                     -------------------------------

STATE OF __________        )
                           )
COUNTY OF _________        )

The foregoing instrument was acknowledged before me this ____ day of April, 2000
by _____________  _____________________,  the _______________________ of Liberty
Food Group, LLC, a ______________  limited liability  company,  on behalf of the
limited liability company.

                                                __________________________
                                                Notary Public

MPL1: 333776-4

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