Document:

<PAGE>

                                                                  EXHIBIT 4.6(A)

                                                                [Execution Copy]

--------------------------------------------------------------------------------

                          SECOND AMENDED and RESTATED

                          MULTI-YEAR CREDIT AGREEMENT

                                  dated as of

                                December 3, 1999

                                     among

                            SMITHFIELD FOODS, INC.,

                    THE SUBSIDIARY GUARANTORS PARTY HERETO,

                            THE LENDERS PARTY HERETO

                                      and

                           THE CHASE MANHATTAN BANK,

                            as Administrative Agent

                           -------------------------

                             CHASE SECURITIES INC.,

                                  as Arranger

                                      and

             COOPERATIEVE CENTRALE RAIFFEISEN BOERENLEENBANK B.A.,
                         "RABOBANK NEDERLAND", NEW YORK
                              BRANCH, as Co-Agent

--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                   ARTICLE I

                                  DEFINITIONS
     SECTION 1.01.  Defined Terms...........................................   2
     SECTION 1.02.  Classification of Loans and Borrowings..................  25
     SECTION 1.03.  Terms Generally.........................................  25
     SECTION 1.04.  Accounting Terms; GAAP..................................  26
     SECTION 1.05.  Currencies, Currency Equivalents........................  26

                                   ARTICLE II

                                  THE CREDITS
     SECTION 2.01.  Commitments.............................................  27
     SECTION 2.02.  Loans and Borrowings....................................  27
     SECTION 2.03.  Requests for Revolving Loan.............................  28
     SECTION 2.04.  Swingline Loans.........................................  30
     SECTION 2.05.  Letters of Credit.......................................  31
     SECTION 2.06.  Funding of Borrowings...................................  37
     SECTION 2.07.  Interest Elections......................................  37
     SECTION 2.08.  Termination or Reduction of Commitments.................  39
     SECTION 2.09.  Repayment of Loans; Evidence of Debt....................  40
     SECTION 2.10.  Prepayment of Loans.....................................  41
     SECTION 2.11.  Fees....................................................  42
     SECTION 2.12.  Interest................................................  44
     SECTION 2.13.  Alternate Rate of Interest..............................  45
     SECTION 2.14.  Increased Costs.........................................  45
     SECTION 2.15.  Break Funding Payments..................................  46
     SECTION 2.16.  Taxes...................................................  47
     SECTION 2.17.  Payments Generally; Pro Rata Treatment;
                       Sharing of Set-offs..................................  48
     SECTION 2.18.  Mitigation Obligations; Replacement of Lenders..........  51

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.01.  Organization; Powers....................................  52
     SECTION 3.02.  Authorization; Enforceability...........................  52
     SECTION 3.03.  Governmental Approvals; No Conflicts....................  52
     SECTION 3.04.  Financial Condition; No Material Adverse Change.........  53

                                      (i)
<PAGE>

                                                                            Page
                                                                            ----
     SECTION 3.05.  Properties..............................................  53
     SECTION 3.06.  Litigation and Environmental Matters....................  53
     SECTION 3.07.  Compliance with Laws and Agreements.....................  54
     SECTION 3.08.  Investment and Holding Company Status...................  54
     SECTION 3.09.  Taxes...................................................  54
     SECTION 3.10.  ERISA...................................................  54
     SECTION 3.11.  Disclosure..............................................  54
     SECTION 3.12.  Regulations U and X.....................................  55
     SECTION 3.13.  Material Agreements and Liens...........................  55
     SECTION 3.14.  Subsidiaries, Etc.......................................  55
     SECTION 3.15.  Solvency................................................  56
     SECTION 3.16.  Year 2000...............................................  56

                                   ARTICLE IV

                                   CONDITIONS

     SECTION 4.01.  Effective Date..........................................  56
     SECTION 4.02.  Each Credit Event.......................................  58

                                   ARTICLE V

                             AFFIRMATIVE COVENANTS

     SECTION 5.01.  Financial Statements and Other Information..............  59
     SECTION 5.02.  Notices of Material Events..............................  61
     SECTION 5.03.  Existence; Conduct of Business..........................  61
     SECTION 5.04.  Payment of Obligations..................................  61
     SECTION 5.05.  Maintenance of Properties; Insurance....................  61
     SECTION 5.06.  Books and Records; Inspection Rights....................  62
     SECTION 5.07.  Compliance with Laws....................................  62
     SECTION 5.08.  Use of Proceeds and Letters of Credit...................  62
     SECTION 5.09.  Additional Subsidiary Guarantors........................  62

                                   ARTICLE VI

                               NEGATIVE COVENANTS

     SECTION 6.01.  Indebtedness............................................  63
     SECTION 6.02.  Liens...................................................  63
     SECTION 6.03.  Fundamental Changes.....................................  64
     SECTION 6.04.  Investments, Loans, Advances, Guarantees
                       and Acquisitions.....................................  66
     SECTION 6.05.  Hedging Agreements......................................  66
     SECTION 6.06.  Restricted Payments.....................................  67

                                     (ii)
<PAGE>

                                                                            Page
                                                                            ----
     SECTION 6.07.  Transactions with Affiliates............................  67
     SECTION 6.08.  Restrictive Agreements..................................  67
     SECTION 6.09.  Senior Note Documents...................................  68
     SECTION 6.10.  Limitation on Sale and Leaseback Transactions...........  68
     SECTION 6.11.  Fiscal Periods..........................................  68
     SECTION 6.12.  Financial Covenants.....................................  68
     SECTION 6.13.  Senior Subordinated Notes...............................  69

                                  ARTICLE VII

                             EVENTS OF DEFAULT..............................  69

                                  ARTICLE VIII

                                   GUARANTEE

     SECTION 8.01  The Guarantee............................................  72
     SECTION 8.02  Obligations Unconditional................................  72
     SECTION 8.03  Reinstatement............................................  73
     SECTION 8.04  Subrogation..............................................  73
     SECTION 8.05  Remedies.................................................  73
     SECTION 8.06  Instrument for the Payment of Money......................  74
     SECTION 8.07  Continuing Guarantee.....................................  74
     SECTION 8.08  Rights of Contribution...................................  74
     SECTION 8.09  General Limitation on Guarantee Obligations..............  74

                                   ARTICLE IX

                           THE ADMINISTRATIVE AGENT.........................  75

                                   ARTICLE X

                                 MISCELLANEOUS

     SECTION 10.01.  Notices................................................  77
     SECTION 10.02.  Waivers; Amendments....................................  78
     SECTION 10.03.  Expenses; Indemnity: Damage Waiver.....................  79
     SECTION 10.04.  Successors and Assigns.................................  81
     SECTION 10.05.  Survival...............................................  83
     SECTION 10.06.  Counterparts; Integration; Effectiveness...............  84
     SECTION 10.07.  Severability...........................................  84
     SECTION 10.08.  Right of Setoff........................................  84
     SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service
                       of Process...........................................  84

                                     (iii)
<PAGE>

                                                                            Page
                                                                            ----
     SECTION 10.10.  WAIVER OF JURY TRIAL...................................  85
     SECTION 10.11.  Headings...............................................  85
     SECTION 10.12.  Confidentiality........................................  85
     SECTION 10.13.  Perfection of Security Interests.......................  86
     SECTION 10.14.  Acknowledgements.......................................  87
     SECTION 10.15.  European Monetary Union................................  87
     SECTION 10.16.  Judgment Currency......................................  89

SCHEDULES:

Schedule 2.01 -- Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 3.13 -- Material Agreements and Liens
Schedule 3.14 -- Subsidiaries
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.08 -- Existing Restrictions

EXHIBITS:

Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrowing Base Certificate
Exhibit C -- Copy of Security Agreement
Exhibit D -- Form of Opinion of Counsel to the Obligors
Exhibit E -- Form of Opinion of Special Counsel
Exhibit F -- Copy of Intercreditor Agreements

                                     (iv)
<PAGE>

     SECOND AMENDED AND RESTATED MULTI-YEAR CREDIT AGREEMENT dated as of
December 3, 1999, among SMITHFIELD FOODS, INC., a Virginia corporation (the
"Borrower"), each of the Subsidiaries of the Borrower identified under the
 --------
caption "SUBSIDIARY GUARANTORS" on the signature pages hereto or that, pursuant
to Section 5.09 hereof, shall become a "Subsidiary Guarantor" hereunder
(individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
                  --------------------                          ----------
Guarantors" and, together with the Borrower, the "Obligors"), each of the
----------                                        --------
lenders that is a party hereto identified under the caption "LENDERS" on
Schedule 2.01 hereto or that, pursuant to Section 10.04 hereof, shall become a
"Lender" hereunder (individually, a "Lender" and, collectively, the "Lenders")
                                     ------                          -------
and THE CHASE MANHATTAN BANK, in its capacity as administrative agent for the
Lenders hereunder (the "Administrative Agent").
                        --------------------

     The Borrower, the Subsidiary Guarantors named therein, the lenders named
therein (including certain of the Lenders hereunder) and The Chase Manhattan
Bank, as Administrative Agent, are parties to an Amended and Restated Multi-Year
Credit Agreement dated as of September 8, 1999 (as heretofore modified and
supplemented and in effect on the date hereof immediately before giving effect
to the amendment and restatement contemplated hereby, the "Existing Credit
                                                           ---------------
Agreement").
---------

     The Borrower and its subsidiaries are engaged as an integrated group in the
business of pork production, hog farming, pork processing and manufacturing
spices and chemicals, and in related businesses, and in furnishing the required
supplies, services, equipment, credit and other facilities for such integrated
operation.  The integrated operation requires financing on such a basis that
credit supplied to the Borrower be made available from time to time to the
Subsidiary Guarantors, as required for the continued successful operation of the
Obligors, separately, and the integrated operation as a whole.  In that
connection, the Obligors have requested that the Lenders (as defined in the
Existing Credit Agreement) and the Administrative Agent amend and restate the
Existing Credit Agreement to provide, inter alia, for extensions of credit, by
                                      ----- ----
means of Dollar and Foreign Currency denominated loans and letters of credit, in
an aggregate amount at any one time outstanding up to but not exceeding
$650,000,000 or its equivalent as herein provided to the Borrower (to be made
available by the Borrower directly or indirectly to the Subsidiary Guarantors
and other of its Subsidiaries in the circumstances specified herein) to finance
the working capital needs and for other general corporate purposes of the
Borrower and its subsidiaries in the ordinary course of business.

     The Lenders are willing to so agree, and accordingly, the parties hereto
agree that the Existing Credit Agreement shall be amended and restated as of the
date hereof (but subject to Section 5.01) in its entirety as follows:
<PAGE>

                                      -2-

                                   ARTICLE I

                                  DEFINITIONS

     SECTION 1.01.  Defined Terms. As used in this Agreement, the following
                    -------------
terms have the meanings specified below:

     "ABR", when used in reference to any Loan or Borrowing, refers to whether
      ---
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.  ABR Loans may be
denominated only in Dollars.

     "Acquisition" means any transaction, or any series of related transactions,
      -----------
consummated after the date of this Agreement, by which the Borrower and/or any
of its Subsidiaries (a) acquires any going business or all or substantially all
of the assets of any Person, whether through purchase of assets, merger or
otherwise, (b) directly or indirectly acquires control of at least a majority
(in number of votes) of the securities of a corporation that have ordinary
voting power for the election of directors or (c) directly or indirectly
acquires control of at least a majority of the partner, member or other
ownership interests of any Person that is not a corporation.

     "Adjusted LIBO Rate" means, with respect to any Eurocurrency Borrowing for
      ------------------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

     "Administrative Agent's Account" means, for each Currency, an account in
      ------------------------------
respect of such Currency designated by the Administrative Agent in a notice to
the Borrower and the Lenders.

     "Administrative Questionnaire" means an Administrative Questionnaire in a
      ----------------------------
form supplied by the Administrative Agent.

     "Affected Currency" has the meaning assigned to such term in Section 2.13.
      -----------------

     "Affiliate" means, with respect to a specified Person, another Person that
      ---------
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

     "Alternate Base Rate" means, for any day, a rate per annum equal to the
      -------------------
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%.  Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.

     "Applicable Dollar Percentage" means, with respect to any Dollar Lender,
      ----------------------------
the percentage of the Total Dollar Sub-Commitment represented by such Dollar
Lender's Dollar
<PAGE>

                                      -3-

Sub-Commitment; provided that if the Dollar Sub-Commitments have terminated or
                --------
expired, the Applicable Dollar Percentages shall be determined based upon the
Total Dollar Sub-Commitment most recently in effect, giving effect to any
assignments.

     "Applicable Percentage" means, with respect to any Lender, the percentage
      ---------------------
of the Total Commitment represented by such Lender's Commitments; provided that
                                                                  --------
if the Commitments have terminated or expired, the Applicable Percentages shall
be determined based upon the Total Commitment most recently in effect, giving
effect to any assignments.

     "Applicable Multicurrency Percentage" means, with respect to any
      -----------------------------------
Multicurrency Lender, the percentage of the Total Multicurrency Sub-Commitment
represented by such Multicurrency Lender's Multicurrency Sub-Commitment;
provided that if the Multicurrency Sub-Commitments have terminated or expired,
--------
the Applicable Multicurrency Percentages shall be determined based upon the
Total Multicurrency Sub-Commitment most recently in effect, giving effect to any
assignments.

     "Applicable Rate" means, with respect to any ABR Loan, Eurocurrency
      ---------------
Revolving Loan, Federal Funds Loan or Swingline Loan, or with respect to the
Commitment Fees payable hereunder, for each Rate Period (as defined below), the
respective rate per annum indicated below for Loans of such Type or Commitment
Fees, as applicable, opposite the applicable Interest Coverage Ratio (as defined
below) indicated below for such Rate Period:

<TABLE>
<CAPTION>
========================================================================================================
                                                          Applicable Rate for
                                      Applicable Rate     Eurocurrency Loans,
                                         for ABR        Federal Funds Loans and           Commitment
     Interest Coverage Ratio              Loans            Letters of Credit                 Fees
--------------------------------------------------------------------------------------------------------
<S>                                   <C>               <C>                               <C>
Greater than or equal to 5.0 to 1           -0-                  0.750%                     0.200%
 ("Tier I")
   ------
--------------------------------------------------------------------------------------------------------
Less than 5.0 to 1 and greater              -0-                  0.875%                     0.225%
 than or equal to 4.5 to 1
 ("Tier II")
   -------
--------------------------------------------------------------------------------------------------------
Less than 4.5 to 1 and greater              -0-                  1.000%                     0.250%
 than or equal to 4.0 to 1
 ("Tier III")
   --------
--------------------------------------------------------------------------------------------------------
Less than 4.0 to 1 and greater             0.125%                1.125%                     0.275%
 than or equal to 3.5 to 1
 ("Tier IV")
   -------
--------------------------------------------------------------------------------------------------------
Less than 3.5 to 1                         0.250%                1.250%                     0.300%
 ("Tier V")
   ------
========================================================================================================
</TABLE>

     For purposes hereof, (i) a "Rate Period" means the period commencing on a
                                 -----------
Rate Reset Date to but not including the immediately following Rate Reset Date;
(ii) a "Rate Reset
        ----------
<PAGE>

                                      -4-

Date" means, with respect to any fiscal quarter or fiscal year, the earlier of
----
(x) the date on which the Borrower delivers (or has delivered pursuant to the
Existing Credit Agreement) the certificate referred to in Section 5.01(c) (a
"Compliance Certificate") in respect of such fiscal quarter or fiscal year, as
 ----------------------
the case may be, and (y) the date on which the Borrower is required to have
delivered the financial statements under Section 5.01(a) or (b) in respect of
such fiscal quarter or fiscal year, as the case may be; and (iii) "Interest
                                                                   --------
Coverage Ratio" means, for any Rate Period, the ratio of Consolidated EBITDA for
--------------
the period of four consecutive fiscal quarters of the Borrower ending on or most
recently prior to the first day of such Rate Period to Consolidated Interest
Expense for such period of four consecutive fiscal quarters.

     Anything in this Agreement to the contrary notwithstanding, but subject to
Section 2.12(d), the Applicable Rate shall be the applicable rate provided for
in Tier V in the table set forth above in this definition (x) during any period
when an Event of Default shall have occurred and be continuing, or (y) if the
applicable Compliance Certificate shall not be delivered within the time that
the applicable financial statements are required to be delivered by Section
5.01(a) or (b), as the case may be (but only, in the case of this clause (y),
with respect to the portion of such Rate Period prior to the delivery of such
Compliance Certificate).

     "Approved Foreign Currency" means, at any time, the French Franc and the
      -------------------------
Euro; provided that with the prior written agreement of all of the Multicurrency
      --------
Lenders, such term shall include any other Foreign Currency, that, at such time,
(a) is dealt with in the London interbank market, (b) is freely transferable and
convertible into Dollars in the London foreign exchange market and (c) with
respect to which no central bank or other governmental authorization in the
country of issue of such Foreign Currency is required to permit use of such
Foreign Currency by any Multicurrency Lender for making any Loan hereunder
and/or to permit the Borrower to borrow and repay the principal thereof and to
pay the interest thereon, unless such authorization has been obtained and is in
full force and effect.

     "Arranger" means Chase Securities Inc.
      --------

     "Assessment Rate" means, for any day, the annual assessment rate in effect
      ---------------
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in Dollars at the offices of such
member in the United States; provided that if, as a result of any change in any
                             --------
law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.

     "Assignment and Acceptance" means an assignment and acceptance entered into
      -------------------------
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

     "Availability Period" means the period from and including the Effective
      -------------------
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
<PAGE>

                                      -5-

     "Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
      ------------
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

     "Board" means the Board of Governors of the Federal Reserve System of the
      -----
United States of America.

     "Borrowing" means (a) Revolving Loans of the same Type, made, converted or
      ---------
continued on the same date and, in the case of Eurocurrency Loans, denominated
in the same Currency and as to which a single Interest Period is in effect or
(b) a Swingline Loan.

     "Borrowing Base" means, at any time, the sum of:  (a) 75% of the result
      --------------
obtained from the following calculation: (i) the aggregate amount of Eligible
Inventory (valued at the lower of (x) cost, on a first-in-first-out basis or (y)
fair market value) of the Borrower and the Subsidiary Guarantors, determined on
a consolidated basis at such time, plus (ii) the aggregate amount of Eligible
                                   ----
Receivables of the Borrower and the Subsidiary Guarantors, determined on a
consolidated basis at such time, in each case as reflected in the Borrowing Base
Certificate then most recently received by the Administrative Agent hereunder
minus (iii) reserves maintained by such Subsidiary Guarantors in respect of
-----
Eligible Receivables relating to discounts, advertising, allowances and similar
items minus (b) the aggregate amount of outstanding checks for the purchase of
      -----
Farm Products (as defined in the Security Agreement) drawn by the Borrower and
its Subsidiaries that have not cleared.

     "Borrowing Base Certificate" means a certificate substantially in the form
      --------------------------
of Exhibit B hereto signed by a Financial Officer.

     "Borrowing Request" means a request by the Borrower for a Revolving
      -----------------
Borrowing in accordance with Section 2.03.

     "Business Day" means any day (a) that is not a Saturday, Sunday or other
      -------------
day on which commercial banks in New York City are authorized or required by law
to remain closed, (b) if such day relates to a Borrowing of, a payment or
prepayment of principal of or interest on, a continuation or conversion of or
into, or the Interest Period for, a Eurocurrency Borrowing denominated in
Dollars, or to a notice by the Borrower with respect to any such Borrowing,
payment, prepayment, continuation, conversion, or Interest Period, that is also
a day on which dealings in deposits denominated in Dollars are carried out in
the London interbank market and (c) if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or the
Interest Period for, any Borrowing denominated in any Foreign Currency, or to a
notice by the Borrower with respect to any such Borrowing, continuation,
payment, prepayment or Interest Period, that is also a day on which commercial
banks in the London foreign exchange market settle payments in the Principal
Financial Center for such Foreign Currency.

     "Capital Lease Obligations" of any Person means the obligations of such
      -------------------------
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and
<PAGE>

                                      -6-

the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

     "Change in Control" means (a) the acquisition of ownership, directly or
      -----------------
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated; or (c) the
acquisition of direct or indirect Control of the Borrower by any Person or
group.

     "Change in Law" means (a) the adoption of any law, rule or regulation after
      -------------
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or,
for purposes of Section 2.14(b), by any lending office of such Lender or by such
Lender's or Issuing Bank's holding company, if any) with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.

     "Chase" means The Chase Manhattan Bank.
      -----

     "Class", when used in reference to any Loan or Borrowing, refers to whether
      -----
such Loan, or the Loans comprising such Borrowing, are Revolving Loans or
Swingline Loans.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
      ----
time.

     "Collateral Agent" means Chase, as collateral agent under the Security
      ----------------
Agreement.

     "Commitment" means, with respect to each Lender, the commitment of such
      ----------
Lender to make Revolving Loans and to acquire participations in Letters of
Credit and Swingline Loans hereunder, expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.08
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.04 (and the "Commitment" of any Lender shall
be deemed to include its Dollar Sub-Commitment and its Multicurrency Sub-
Commitment, if any).  The initial amount of each Lender's Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Commitment, as applicable.  The initial
amount of the Total Commitment (including the Total Dollar Sub-Commitment and
the Total Multicurrency Sub-Commitment) is $650,000,000.

     "Commitment Fee" means the fees payable at the Applicable Rate pursuant to
      --------------
Section 2.11(a).
<PAGE>

                                      -7-

     "Consolidated Current Ratio" means, on any date, the ratio of (i) the
      --------------------------
consolidated current assets of the Borrower and its Subsidiaries on such date to
(ii) the sum on such date (without duplication) of the consolidated current
liabilities of the Borrower and its Subsidiaries plus the aggregate outstanding
                                                 ----
principal amount of the Loans and Pari Passu Debt plus the aggregate principal
                                                  ----
amount of Indebtedness of the Borrower and its Subsidiaries that would be
characterized as current liabilities but for the existence of the Commitments
hereunder or any commitments of lenders to make Pari Passu Debt available to the
Borrower or any of its Subsidiaries.

     "Consolidated EBIT" means, for any period, an amount equal to (a) the sum
      -----------------
for such period of (i) Consolidated Net Income, (ii) to the extent subtracted in
determining such Consolidated Net Income, provisions for (x) taxes based on
income and (y) Consolidated Interest Expense minus (b) any items of gain (or
                                             -----
plus any items of loss) which were included in determining such Consolidated Net
----
Income and were not realized in the ordinary course of business.

     "Consolidated EBITDA" means, for any period, an amount equal to (a) the sum
      -------------------
for such period of Consolidated Net Income and, to the extent subtracted in
determining such Consolidated Net Income, provisions for (i) taxes based on
income, (ii) Consolidated Interest Expense and (iii) depreciation and
amortization expense minus (b) any items of gain (or plus any items of loss)
                     -----                           ----
which were included in determining such Consolidated Net Income and were (i) not
realized in the ordinary course of business or (ii) the result of any sale of
assets.

     "Consolidated Intangible Assets" means, on any date, the aggregate amount
      ------------------------------
of Intangible Assets of the Borrower and its Subsidiaries, determined on a
consolidated basis at such time.

     "Consolidated Interest Expense" means, for any period, the consolidated
      -----------------------------
interest expense of the Borrower and its Subsidiaries (whether cash or non-cash
interest expense or deferred or accrued interest expense and the interest
portion of all Capital Lease Obligations during such period).

     "Consolidated Net Income" means, for any period, the net income (or
      -----------------------
deficit) of the Borrower and its Subsidiaries; provided, however, that there
                                               --------
shall be excluded from Consolidated Net Income (i) the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Borrower or such Person's assets are acquired by the
Borrower, (ii) the income (or deficit) of any Person (other than a consolidated
Subsidiary) in which the Borrower has an ownership interest, except to the
extent that any such income has been actually received by the Borrower in the
form of dividends or similar distributions, (iii) the undistributed earnings of
any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions of such Subsidiary is restricted and (iv) any income or
gain resulting from any write-up or revaluation of the assets of the Borrower or
its Subsidiaries.

     "Consolidated Shareholders' Equity" means, on any date, the aggregate
      ---------------------------------
amount of shareholders' equity of the Borrower and its Subsidiaries on such
date, determined on a consolidated basis.
<PAGE>

                                      -8-

     "Consolidated Tangible Net Worth" means, on any date, the excess of
      -------------------------------
Consolidated Shareholders' Equity over Consolidated Intangible Assets on such
date.

     "Consolidated Total Funded Debt" means the aggregate amount of  Funded Debt
      ------------------------------
of  the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, minus, to the extent included therein, the outstanding
                      -----
amount of the Loans (other than the lowest average daily outstanding balance of
the Loans for any period of 30 consecutive days during the 12 month period then
most recently ended).

     "Consolidated Total Liabilities" means, on any date, the aggregate amount
      ------------------------------
at which all liabilities of the Borrower and its Subsidiaries (including,
without limitation, (a) all Guarantees of Indebtedness by such Persons and (b)
all amounts attributable to Mandatorily Redeemable Stock of the Borrower and its
Subsidiaries to the extent that such Mandatorily Redeemable Stock is redeemable
within one year of such date) would be shown on a consolidated balance sheet of
such Persons at such time.

     "Consolidated Working Capital" means, on any date, the excess of (i) the
      ----------------------------
consolidated current assets of the Borrower and its Subsidiaries on such date
over (ii) the sum on such date (without duplication) of the consolidated current
liabilities of the Borrower and its Subsidiaries plus the aggregate outstanding
                                                 ----
principal amount of the Loans and Pari Passu Debt plus the aggregate principal
                                                  ----
amount of any commercial paper or other short-term Indebtedness of the Borrower
and its Subsidiaries that would be characterized as current liabilities but for
the existence of the Commitments hereunder or any commitments of lenders to make
Pari Passu Debt available to the Borrower or any of its Subsidiaries.

     "Control" means the possession, directly or indirectly, of the power to
      -------
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
 -----------       ----------

     "Currency" means Dollars or any Foreign Currency.
      --------

     "Debt Issuance" means any issuance or incurrence by the Borrower or any of
      -------------
its Subsidiaries of any Indebtedness.

     "Debt Service" means, for any period, the sum, for the Borrower and its
      ------------
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following:  (a) all regularly scheduled payments
or prepayments of principal of Indebtedness made during such period plus (b) all
                                                                    ----
Interest Expense for such period.

     "Default" means any event or condition which constitutes an Event of
      -------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

     "Disclosed Matters" means the actions, suits and proceedings and the
      -----------------
environmental matters disclosed in Schedule 3.06.
<PAGE>

                                      -9-

     "Dollar Equivalent" means, with respect to any Borrowing denominated in an
      -----------------
Approved Foreign Currency, the amount of Dollars that would be required to
purchase the amount of the Foreign Currency of such Borrowing on the date two
Business Days prior to the date of such Borrowing (or, in the case of any
determination made under Section 2.10(b) or redenomination under the last
sentence of Section 2.17(c), or in the case of a redenomination of any other
amount into Dollars as provided herein, on the date of determination or
redenomination therein referred to), based upon the spot selling rate at which
the Administrative Agent offers to sell such Approved Foreign Currency for
Dollars in the London foreign exchange market at approximately 11:00 a.m.,
London time, for delivery two days later, provided that with respect to any
                                          --------
determination to be made by the Borrower pursuant to Section 5.01(f), such spot
selling rate shall be determined by reference to the spot selling rate set forth
in the Wall Street Journal on the Business Day immediately preceding the date on
       -------------------
which such determination is to be made.

     "Dollar LC Exposure" means, at any time, the sum of (a) the aggregate
      ------------------
undrawn amount of all outstanding Dollar Letters of Credit at such time plus (b)
the aggregate amount of all LC Disbursements in respect of such Letters of
Credit that have not yet been reimbursed by or on behalf of any Obligor at such
time.  The Dollar LC Exposure of any Lender at any time shall be its Applicable
Dollar Percentage of the total Dollar LC Exposure at such time.

     "Dollar Lender" means (a) on the Effective Date, the Lenders having Dollar
      -------------
Sub-Commitments on Schedule 2.01 hereto under the heading "Dollar Lenders" and
(b) thereafter, the Lenders from time to time holding Loans made pursuant to
Dollar Sub-Commitments or holding Dollar Sub-Commitments, after giving effect to
any assignments thereof permitted by Section 10.04(b).

     "Dollar Letters of Credit" means Letters of Credit that utilize the Dollar
      ------------------------
Sub-Commitments.

     "Dollar Loan" means a Loan denominated in Dollars.
      -----------

     "Dollar Sub-Commitment" means, as to each Dollar Lender, the obligation of
      ---------------------
such Dollar Lender to make Revolving Loans and to acquire participations in
Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Revolving Dollar Credit Exposure hereunder, as
such commitment may be (a) reduced from time to time pursuant to Section 2.08
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.04.  The initial amount of each Lender's
Dollar Sub-Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Dollar Sub-
Commitment, as applicable.  The initial aggregate amount of the Total Dollar
Sub-Commitment is $610,000,000.

     "Dollars" or "$" refers to lawful money of the United States of America.
      -------      -

     "Effective Date" has the meaning specified in Section 4.01.
      --------------

     "Eligible Inventory" means, as at any date with respect to any Person, all
      ------------------
Inventory (i) that is owned by (and in the possession or under the control of)
such Person as at
<PAGE>

                                      -10-

such date, (ii) that is located in a jurisdiction in the United States of
America, (iii) as to which (before the Security Termination Date) appropriate
Uniform Commercial Code financing statements have been filed naming such Person
as "debtor" and the Collateral Agent as "secured party", and over which (before
the Security Termination Date) the Collateral Agent has a perfected security
interest subject to no prior or equal Lien (other than the pari passu security
                                                           ---- -----
interest securing the Pari Passu Debt), subject to Section 10.13, (iv) that
meets all standards imposed by any governmental agency or department or division
thereof having regulatory authority over such inventory, its use or sale, (v)
for which such Person has made full and final payment and (vi) that is currently
usable in the manufacturing process or saleable in the normal course of such
Person's business without any notice to, or consent of, any governmental agency
or department or division thereof (excluding however, except to the extent that
the Required Lenders otherwise agree with respect to any specific customer or
third-party processor, any such Inventory that has been shipped to a customer of
such Person, including third-party processors, even if on a consignment or "sale
or return" basis, and excluding repair and replacement parts for machinery and
equipment). Notwithstanding anything in clause (vi) of the foregoing sentence to
the contrary (but subject to clauses (i) through (v) of the foregoing sentence),
Eligible Inventory shall include but not be limited to all barrows, gilts,
boars, sows, feeder pigs, suckling pigs, nursery pigs and commercial sows and
boars, multiplier hogs, nucleus hogs and other hogs (collectively, "Hogs") at
                                                                    ----
the time of determination owned and being raised at facilities owned by such
Person or at facilities subject to an exclusive contract with such Person (i.e.,
the operator of such facility has no similar contract with any other Person) for
the feeding and raising of Hogs.

     "Eligible Receivables" means, as at any date with respect to any Person,
      --------------------
the aggregate amount of all accounts (as defined in the Uniform Commercial Code)
of such Person arising from the sale by such Person of Inventory in the ordinary
course of its business and (before the Security Termination Date) over which the
Collateral Agent has a perfected security interest subject to no prior or equal
Lien (other than the pari passu security interest securing the Pari Passu Debt),
                     ---- -----
subject to Section 10.13, other than the following (determined without
duplication):

     (a)  any account not payable in Dollars,

     (b)  any account that is not paid within 60 days (subject to the last
   sentence of this definition of "Eligible Receivables") after the date of the
   invoice for the related inventory,

     (c)  any account owing from a subsidiary or Affiliate of such Person,

     (d)  any account (other than an LC-Backed Receivable) owing from an account
   debtor whose principal place of business is located outside of the United
   States of America, provided that the aggregate amount of account that are not
                      --------
   excluded from the definition of "Eligible Receivables" pursuant to this
   clause (d) by virtue of their constituting LC-Backed Receivables (other than
   LC-Backed Receivables the related letter of credit for which has been
   delivered to the Collateral Agent in pledge under the Security Agreement) may
   not exceed 10% of the Borrowing Base,
<PAGE>

                                      -11-

     (e)  any account owing from an account debtor that is insolvent or the
   subject of a bankruptcy case,

     (f)  any account that is more than 28 days (subject to the last sentence of
   this definition of "Eligible Receivables") past due,

     (g)  all accounts of any account debtor if more than 20% of the aggregate
   amount of the accounts owing from such account debtor are more than 28 days
   (subject to the last sentence of this definition of "Eligible Receivables")
   past due,

     (h)  all accounts owing from any account debtor if the accounts owing from
   such account debtor and its Affiliates at the time exceed 10% of all accounts
   then payable to the Obligors,

     (i)  any account as to which there is any unresolved dispute with the
   respective account debtor (but only to the extent of the amount thereof in
   dispute),

     (j)  any account evidenced by an instrument (as defined in the Uniform
   Commercial Code) not in the possession of the Collateral Agent and containing
   all necessary endorsements,

     (k)  any account representing an obligation for goods sold on consignment,
   approval or a sale-or-return basis or subject to any other repurchase, return
   or offset arrangement,

     (l)  any amount as to which there is an offsetting liability from the
   Borrower, any Subsidiary or any Affiliate of the Borrower (but only to the
   extent of the amount of such offsetting liability), and

     (m)  all amounts reserved by any Subsidiary or Affiliate of the Borrower
   related to advertising and promotional programs for the respective account
   debtor (excluding general promotional reserves that are not reserved on a
   specific account basis).

In recognition of the fact that, on the date of this Agreement, the accounting
systems of certain Subsidiaries are unable to track the number of days specified
in clauses (b), (f) and (g) above, such numbers of days for each such Subsidiary
shall be deemed for purposes hereof to be the number of days that the accounting
system of such Subsidiary can track that is closest to such specified number of
days, provided that (i) if such specified number of days is exactly equidistant
from two numbers of days that can be so tracked, such specified number of days
shall be deemed to be the lower of such two numbers, (ii) if the closest such
number of days that can be so tracked is more than seven days higher than such
specified number of days, such specified number of days shall be deemed to be
the closest number of days that can be so tracked that is lower than such number
of specified days and (iii) this sentence shall cease to have any effect after
the date falling six months after the date hereof.

     "Environmental Laws" means all laws, rules, regulations, codes, ordinances,
      ------------------
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or
<PAGE>

                                      -12-

entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.

     "Environmental Liability" means any liability, contingent or otherwise
      -----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

     "Equity Issuance" means any issuance or sale by the Borrower after the
      ---------------
Effective Date of any of its capital stock.

     "Equity Rights" means, with respect to any Person, any outstanding
      -------------
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or outstanding
securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such Person.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended from time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
      ---------------
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.

     "ERISA Event" means (a) any "reportable event", as defined in Section 4043
      -----------
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
<PAGE>

                                      -13-

     "Eurocurrency", when used in reference to any Loan or Borrowing, refers to
      ------------
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.

     "Euros", has the meaning assigned to such term in Section 10.15(a).
      -----

     "Event of Default" has the meaning assigned to such term in Article VII.
      ----------------

     "Excluded Taxes" means, with respect to the Administrative Agent, any
      --------------
Lender, the Issuing Banks or any other recipient of any payment to be made by or
on account of any obligation of the Obligors hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which an Obligor is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by the Obligors
under Section 2.18(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.16(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.16(a).

     "Existing Credit Agreement" has the meaning assigned to such term in the
      -------------------------
preamble to this Agreement.

     "Federal Funds", when used in reference to any Loan or Borrowing, refers to
      -------------
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Federal Funds Rate.  Federal Funds
Loans may be denominated only in Dollars.

     "Federal Funds Effective Rate" means, for any day, the weighted average
      ----------------------------
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding 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 (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

     "Federal Funds Rate" means the "offered rate", as determined by the
      ------------------
Administrative Agent, for overnight federal funds.

     "Financial Officer" means the chief financial officer, principal accounting
      -----------------
officer, treasurer or controller of the Borrower.
<PAGE>

                                      -14-

          "Foreign Currency" means at any time any Currency other than Dollars.
           ----------------

          "Foreign Currency Equivalent" means, with respect to any amount in
           ---------------------------
Dollars, the amount of a Foreign Currency that could be purchased with such
amount of Dollars using the reciprocal of the foreign exchange rate(s) specified
in the definition of the term "Dollar Equivalent", as determined by the
Administrative Agent.

          "Foreign Lender" means any Lender that is organized under the laws
           --------------
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

          "Funded Debt" means all Indebtedness which would, in accordance with
           -----------
GAAP, constitute long term debt, including:

          (a)  any Indebtedness with a maturity more than one year after the
     creation of such Indebtedness, including any portion thereof in current
     liabilities;

          (b)  any Indebtedness outstanding under a revolving credit or similar
     agreement providing for borrowings (and renewals and extensions thereof)
     over a period of more than one year notwithstanding that any such
     Indebtedness may be payable on demand or within one year after the creation
     thereof;

          (c)  any Capital Lease Obligations; and

          (d)  any Guarantee with respect to Funded Debt of another Person.

          "GAAP" means generally accepted accounting principles in the United
           ----
States of America.

          "Governmental Authority" means the government of the United States of
           ----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

          "Guarantee" of or by any Person (the "guarantor") means any
           ---------                            ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
                   ---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or
<PAGE>

                                      -15-

letter of guaranty issued to support such Indebtedness or obligation; provided,
                                                                      --------
that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.

     "Hazardous Materials" means all explosive or radioactive substances or
      -------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

     "Hedging Agreement" means any swap agreement, cap agreement, collar
      -----------------
agreement, put or call, futures contract, forward contract or similar agreement
or arrangement entered into in respect of interest rates, foreign exchange rates
or prices of commodities.

     "Indebtedness" of any Person means, without duplication, (a) all
      ------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding accounts
payable incurred in the ordinary course of business), (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 property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances.  The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.  The Indebtedness
of a Person shall not include obligations of such Person to pay rent under
operating leases to the extent that such obligations do not constitute Capital
Lease Obligations.

     "Indemnified Taxes" means Taxes other than Excluded Taxes.
      -----------------

     "Intangible Assets" means, with respect to any Person on any date, the
      -----------------
following:

     (a)  patents, copyrights, trademarks, trade names, service marks, brand
   names, franchises, goodwill, experimental expenses and other similar
   intangibles;

     (b)  deferred assets (other than prepaid taxes, prepaid insurance, prepaid
    contract payments, prepaid license fees and other prepaid expenses which are
    refundable);

     (c)  unamortized debt discount and expense; and
<PAGE>

                                      -16-

          (d)  all other property or assets (whether real, personal or mixed,
     and whether tangible or intangible) which would be considered to be
     intangible under GAAP.

          "Intercreditor Agreements" mean, collectively, the Intercreditor
           ------------------------
Agreement dated as of July 15, 1997 and the Intercreditor Agreement dated as of
October 27, 1999, a copy of each of which is attached as Exhibit F hereto, as
the same shall be modified and supplemented and in effect from time to time.

          "Interest Election Request" means a request by the Borrower to convert
           -------------------------
or continue a Revolving Borrowing in accordance with Section 2.07.

          "Interest Expense" means, for any period, the sum, for the Borrower
           ----------------
(determined without duplication in accordance with GAAP), of the following: (a)
all interest in respect of Indebtedness accrued or capitalized during such
period (whether or not actually paid during such period) plus (b) the net
                                                         ----
amounts payable (or minus the net amounts receivable) under Hedging Agreements
                    -----
related to interest and accrued during such period (whether or not actually paid
or received during such period).

          "Interest Payment Date" means (a) with respect to any ABR Revolving
           ---------------------
Loan, the last day of each March, June, September and December, (b) with respect
to any Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period, (c) with respect
to any Federal Funds Revolving Loan, the last day of each month and (d) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.

          "Interest Period" means, with respect to any Eurocurrency Borrowing,
           ---------------
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (i) if any
                                                  --------
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period and (iii) no Interest Period
shall extend beyond the Maturity Date. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

          "Inventory" means, collectively, "Inventory" and "Farm Products" as
           ---------
defined in the Security Agreement.

          "Investment" means, for any Person: (a) the acquisition (whether for
           ----------
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person or any agreement
<PAGE>

                                      -17-

to make any such acquisition (including, without limitation, any "short sale" or
any sale of any securities at a time when such securities are not owned by the
Person entering into such short sale); (b) the making of any deposit with, or
advance, loan or other extension of credit to, any other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such Person, but
excluding any such advance, loan or extension of credit having a term not
exceeding 90 days representing the purchase price of programming, advertising,
inventory or supplies sold in the ordinary course of business); (c) the entering
into of any Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such Person or (d) any
Hedging Agreement having the commercial effect of a synthetic or derivative
Investment.

          "Issuing Bank" means Chase, in its capacity as the issuer of Letters
           ------------
of Credit hereunder, and its successors in such capacity as provided in Section
2.05(i). Chase may, in its discretion, arrange for one or more Letters of Credit
to be issued by its Affiliates, in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate. Any references herein to the "relevant" Issuing Bank shall mean the
issuer of the related Letter of Credit.

          "Joint Venture" means any Investment by the Borrower or any of its
           -------------
Subsidiaries as a joint venturer or partner in, or lender to, any other Person
(other than a Subsidiary) principally engaged in a business in which the
Borrower and its Subsidiaries are permitted by Section 6.03(c) to be engaged.

          "LC-Backed Receivable" means an account (as defined in the Uniform
           --------------------
Commercial Code) to the extent that the payment thereof is backed by a letter of
credit issued for account of the related account debtor, or confirmed, by a
domestic office of a commercial bank organized under the laws of the United
States of America or any state thereof the short term deposits of which are
rated A-1 or better by S&P or P-1 by Moody's.

          "LC Disbursement" means a payment made by an Issuing Bank pursuant to
           ---------------
a Letter of Credit.

          "LC Exposure" means, as at any time, the sum of the Dollar LC Exposure
           -----------
and the Multicurrency LC Exposure.

          "Letter of Credit" means any letter of credit issued pursuant to this
           ----------------
Agreement.

          "LIBO Rate" means, with respect to any Eurocurrency Borrowing for any
           ---------
Interest Period and denominated in any Currency, the rate appearing on the
Screen at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for deposits denominated in
such Currency with a maturity comparable to such Interest Period.  In the event
that such rate is not available on the Screen at such time for any reason, then,
unless the last sentence of Section 10.15(e) is applicable, the "LIBO Rate" with
                                                                 ---------
respect to such Eurocurrency Borrowing for such Interest Period shall be the
rate at which deposits in such Currency in the amount of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the principal London
office of the Administrative Agent in
<PAGE>

                                      -18-

immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

          "LIBOR" means, for any Currency, the rate at which deposits
           -----
denominated in such Currency are offered to leading banks in the London
interbank market.

          "Lien" means, with respect to any asset, (a) any mortgage, deed of
           ----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities. The interest of a lessor in any property leased pursuant to an
operating lease shall not constitute a Lien over such property securing
obligations of the related lessee to pay rent under such lease to the extent
that such obligations do not constitute Capital Lease Obligations.

          "Loan Documents" means this Agreement, any promissory notes evidencing
           --------------
Loans hereunder and the Security Documents.

          "Loans" means the loans made by the Lenders to the Borrower pursuant
           -----
to this Agreement.

          "Local Time" means, with respect to any Loan denominated in or any
           ----------
payment to be made in any Currency, the local time in the Principal Financial
Center for the Currency in which such Loan is denominated or such payment is to
be made.

          "Mandatorily Redeemable Stock" means, with respect to any Person, each
           ----------------------------
share of such Person's capital stock to the extent that it is (a) redeemable,
payable or required to be purchased or otherwise retired or extinguished, or
convertible into Indebtedness of such Person (i) at a fixed or determinable
date, whether by operation of a sinking fund or otherwise, (ii) at the option of
any Person other than such Person or (iii) upon the occurrence of a condition
not solely within the control of such Person, such as redemption required to be
made out of future earnings or (b) convertible into other Mandatorily Redeemable
Stock of such Person.

          "Margin Stock" means margin stock within the meaning of Regulations U
           ------------
and X.

          "Material Adverse Effect" means a material adverse effect on (a) the
           -----------------------
Transactions, (b) the business, assets, operations, property, prospects or
condition, financial or otherwise, of the Obligors taken as a whole, (c) the
ability of any Obligor to perform any of its obligations under this Agreement or
the other Loan Documents or (d) the rights of or benefits available to the
Lenders under this Agreement or the other Loan Documents.

          "Material Indebtedness" means Indebtedness (other than the Loans and
           ---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Subsidiaries in an aggregate
principal amount exceeding $5,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the
<PAGE>

                                      -19-

maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.

          "Maturity Date" means July 15, 2002; provided that if such date is not
           -------------                       --------
a Business Day the Maturity Date shall be the immediately preceding Business
Day.

          "Moody's" means Moody's Investors Service, Inc.
           -------

          "Multicurrency LC Exposure" means, at any time, the sum of (a) the
           -------------------------
aggregate undrawn amount of all outstanding Multicurrency Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements in respect of
such Letters of Credit that have not yet been reimbursed by or on behalf of any
Obligor at such time.  The Multicurrency LC Exposure of any Lender at any time
shall be its Applicable Multicurrency Percentage of the total Multicurrency LC
Exposure at such time.

          "Multicurrency Lender" means (a) on the Effective Date, the Lenders
           --------------------
having Multicurrency Sub-Commitments on Schedule 2.01 hereto under the heading
"Multicurrency Lenders" and (b) thereafter, the Lenders from time to time
holding Loans made pursuant to Multicurrency Sub-Commitments or holding
Multicurrency Sub-Commitments, after giving effect to any assignments thereof
permitted by Section 10.04(b).

          "Multicurrency Letters of Credit" means Letters of Credit that
           -------------------------------
utilize the Multicurrency Sub-Commitments.

          "Multicurrency Loan" means a Loan denominated in an Approved Foreign
           ------------------
Currency.

          "Multicurrency Sub-Commitment" means, as to each Multicurrency Lender,
           ----------------------------
the obligation of such Multicurrency Lender to make Revolving Loans and to
acquire participations in Letters of Credit hereunder, in each case, denominated
in Dollars or in an Approved Foreign Currency, expressed as a Dollar amount
representing the Dollar Equivalent of the maximum aggregate amount of such
Lender's Revolving Multicurrency Credit Exposure hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The initial amount of each Lender's Multicurrency
Sub-Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Multicurrency
Sub-Commitment, as applicable. The initial aggregate amount of the Total
Multicurrency Sub-Commitment is $40,000,000.

          "Multiemployer Plan" means a multiemployer plan as defined in Section
           ------------------
4001(a)(3) of ERISA.

          "Obligors" means the Borrower and the Subsidiary Guarantors.
           --------

          "Other Taxes" means any and all present or future stamp or documentary
           -----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made
<PAGE>

                                      -20-

hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement.

          "Pari Passu Debt" means any Indebtedness (a) in respect of which the
           ---------------
Borrower is primarily liable as the borrower and the Subsidiary Guarantors (but
no other Subsidiary) are liable as guarantors, (b) that is secured only by the
Lien created by the Security Agreement and (c) that the Required Lenders consent
to as being treated as Pari Passu Debt. All of the requirements set forth in the
preceding clauses (a), (b) and (c) must be satisfied in order for any
Indebtedness to be Pari Passu Debt.

          "PBGC" means the Pension Benefit Guaranty Corporation referred to and
           ----
defined in ERISA and any successor entity performing similar functions.

          "Permitted Encumbrances" means:
           ----------------------

          (a)  Liens imposed by law for taxes that are not yet due or are being
     contested in compliance with Section 5.04;

          (b)  carriers', warehousemen's, mechanics', materialmen's, repairmen's
     and other like Liens imposed by law, arising in the ordinary course of
     business and securing obligations that are not overdue by more than 30 days
     or are being contested in compliance with Section 5.04;

          (c)  pledges and deposits made in the ordinary course of business in
     compliance with workers' compensation, unemployment insurance and other
     social security laws or regulations;

          (d)  deposits to secure the performance of bids, trade contracts,
     leases, statutory obligations, surety and appeal bonds, performance bonds
     and other obligations of a like nature, in each case in the ordinary course
     of business;

          (e)  easements, zoning restrictions, rights-of-way and similar
     encumbrances on real property imposed by law or arising in the ordinary
     course of business that do not secure any monetary obligations and do not
     materially detract from the value of the affected property or interfere
     with the ordinary conduct of business of the Borrower or any Subsidiary;

          (f)  Liens securing judgments to the extent, for an amount and for a
     period not resulting in an Event of Default under Article VII(k); and

          (g)  Liens created under the Federal Packers and Stockyards Act, as
     amended;

provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
<PAGE>

                                      -21-

          "Permitted Investments" means:
           ---------------------

          (a)  direct obligations of, or obligations the principal of and
     interest on which are unconditionally guaranteed by, the United States of
     America (or by any agency thereof to the extent such obligations are backed
     by the full faith and credit of the United States of America), in each case
     maturing within one year from the date of acquisition thereof;

          (b)  investments in commercial paper maturing within 270 days from the
     date of acquisition thereof and having, at such date of acquisition, the
     highest credit rating obtainable from S&P or from Moody's;

          (c)  investments in certificates of deposit, banker's acceptances and
     time deposits maturing within 180 days from the date of acquisition thereof
     issued or guaranteed by or placed with, and money market deposit accounts
     issued or offered by, any domestic office of any commercial bank organized
     under the laws of the United States of America or any State thereof which
     has a combined capital and surplus and undivided profits of not less than
     $500,000,000;

          (d)  fully collateralized repurchase agreements with a term of not
     more than 30 days for securities described in clause (a) above and entered
     into with a financial institution satisfying the criteria described in
     clause (c) above;

          (e)  common stock of the Borrower; and

          (f)  capital stock of corporations in similar or related businesses to
     that of the Borrower and listed on the New York Stock Exchange, NASDAQ, the
     American Stock Exchange.

          "Person" means any natural person, corporation, limited liability
           ------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

          "Plan" means any employee pension benefit plan (other than a
           ----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

          "Prime Rate" means the rate of interest per annum publicly announced
           ----------
from time to time by Chase as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.

          "Principal Financial Center" means, in the case of any Currency, the
           --------------------------
principal financial center where such Currency is cleared and settled, as
determined by the Administrative Agent.
<PAGE>

                                      -22-

          "Rabobank" means COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
           --------
"Rabobank Nederland", New York Branch.

          "Register" has the meaning set forth in Section 10.04.
           --------

          "Regulations U and X" means, respectively, Regulations U and X of the
           -------------------
Board, as the same may be amended from time to time.

          "Related Parties" means, with respect to any specified Person, such
           ---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.

          "Required Lenders" means, at any time, Lenders having Revolving Credit
           ----------------
Exposures and unused Commitments representing more than 50% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time.

          "Restricted Payment" means any dividend or other distribution (whether
           ------------------
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Borrower
or any Subsidiary or any option, warrant or other right to acquire any such
shares of capital stock of the Borrower or any Subsidiary.

          "Revolving Credit Exposure" means, with respect to any Lender at any
           -------------------------
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its Dollar LC Exposure, Multicurrency LC Exposure and Swingline
Exposure at such time.

          "Revolving Dollar Credit Exposure" means, with respect to any Dollar
           --------------------------------
Lender at any time, the sum of the outstanding principal amount of such Dollar
Lender's Dollar Loans and its Dollar LC Exposure and Swingline Exposure at such
time.

          "Revolving Loan" means a Loan made pursuant to Section 2.03.
           --------------

          "Revolving Multicurrency Credit Exposure" means, with respect to any
           ---------------------------------------
Multicurrency Lender at any time, the sum of the outstanding principal amount of
such Multicurrency Lender's Multicurrency Loans and its Multicurrency LC
Exposure at such time.

          "S&P" means Standard & Poor's Ratings Services.
           ---

          "Screen" means, for any Currency, the relevant display page for LIBOR
           ------
for such Currency (as determined by the Administrative Agent) of the Telerate
Service of Bridge Information Services (or any successor thereto or substitute
therefor); provided that if the Administrative Agent determines that there is no
such relevant display page for LIBOR for such Currency, "Screen" shall mean the
relevant display page for LIBOR for such Currency (as determined by the
Administrative Agent) of the Reuter Monitor Money Rates Service (or any
successor thereto or substitute therefor).
<PAGE>

                                      -23-

          "Security Agreement" means the Amended and Restated Collateral Agency
           ------------------
and Security Agreement a copy of which is attached as Exhibit C hereto, as the
same shall be modified and supplemented and in effect from time to time.

          "Security Documents" means the Security Agreement and all Uniform
           ------------------
Commercial Code financing statements required by the Security Agreement to be
filed with respect to the security interests in personal property created
pursuant to the Security Agreement.

          "Security Termination Date" means the date, if any, that the Security
           -------------------------
Agreement is terminated in accordance with Section 10.02(c)(ii).

          "Senior Consolidated Funded Debt" means, at any time, the Consolidated
           -------------------------------
Total Funded Debt, minus the aggregate then-outstanding principal amount of the
                   -----
Senior Subordinated Notes.

          "Senior Note Documents" means (i) the Note Purchase Agreement dated as
           ---------------------
of July 15, 1996 among the Borrower and the purchasers referred to therein, (ii)
the Joint and Several Guaranty, the Notes and the Security Documents referred to
in said Note Purchase Agreement, (iii) the Indebtedness (further described in
Schedule 6.01 attached hereto) of the Borrower and its Subsidiaries to Colonial
Farm Credit ACA and (iv) Note Purchase Agreement dated as of October 27, 1999
among the Borrower and the purchasers referred to therein, in each of the cases
referred to in the foregoing clauses (i), (ii), (iii) and (iv) as the same
shall, subject to Section 6.09, be modified and supplemented and in effect from
time to time.

          "Senior Subordinated Notes" means, collectively, (a) the 7-5/8 %
           -------------------------
Senior Subordinated Notes, due 2008, issued by the Borrower pursuant to an
Indenture, dated as of February 9, 1998 (the "Indenture"), among the Borrower
                                              ---------
and SunTrust Bank, Atlanta, as trustee, and (b) any additional Funded Debt of
the Borrower (and in respect of which none of its Subsidiaries is directly or
indirectly obligated) that is subordinated to the obligations of the Borrower to
the Lenders hereunder, which is incurred upon terms and conditions substantially
identical (as determined by the Administrative Agent, in its sole discretion) to
the terms and conditions set forth on the date hereof in the Indenture (except
in respect of interest), which shall have no provisions for a sinking fund or
other scheduled reductions of principal prior to final maturity and which shall
have a final maturity date for the repayment of principal not earlier than the
second anniversary of the Maturity Date, in each case as the same shall, subject
to Section 6.13, be modified and supplemented and in effect from time to time.

          "Solvent" has the meaning assigned to such term in Section 4.01(j).
           -------

          "Special Counsel" means Milbank, Tweed, Hadley & McCloy LLP, in its
           ---------------
capacity as special counsel to Chase, as Administrative Agent of the credit
facility contemplated hereby.

          "Statutory Reserve Rate" means for any day (or for the Interest Period
           ----------------------
for any Eurocurrency Borrowing), a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the arithmetic mean of the aggregate of the maximum reserve
    -----
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the
<PAGE>

                                      -24-

Administrative Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in Dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurocurrency Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

          "Sub-Commitment" shall refer, as applicable. to a Dollar Sub-
           --------------
Commitment or a Multicurrency Sub-Commitment.

          "subsidiary" means, with respect to any Person (the "parent") at any
           ----------                                          ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

          "Subsidiary" means any subsidiary of the Borrower.
           ----------

          "Swingline Exposure" means, at any time, the aggregate principal
           ------------------
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Dollar Percentage of the total
Swingline Exposure at such time.

          "Swingline Lender" means Chase, in its capacity as lender of Swingline
           ----------------
Loans hereunder.

          "Swingline Loan" means a Loan made pursuant to Section 2.04.
           --------------

          "Taxes" means any and all present or future taxes, levies, imposts,
           -----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

          "Three-Month Secondary CD Rate" means, for any day, the secondary
           -----------------------------
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately
<PAGE>

                                      -25-

10:00 a.m., New York City time, on such day (or, if such day is not a Business
Day, on the next preceding Business Day) by the Administrative Agent from three
negotiable certificate of deposit dealers of recognized standing selected by it.

          "Total Commitment" means, at any time, the aggregate amount of the
           ----------------
Commitments as in effect at such time.

          "Total Dollar Sub-Commitment" means, at any time, the aggregate amount
           ---------------------------
of the Dollar Sub-Commitments as in effect at such time.

          "Total Multicurrency Sub-Commitment" means, at any time, the aggregate
           ----------------------------------
amount of the Multicurrency Sub-Commitments as in effect at such time.

          "Transactions" means (i) with respect to the Borrower, the execution,
           ------------
delivery and performance by the Borrower of Loan Documents to which it is a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder and (ii) with respect to any Obligor (other than
the Borrower), the execution, delivery and performance by such Obligor of the
Loan Documents to which it is a party.

          "Type", when used in reference to any Loan or Borrowing, refers to
           ----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, the Alternate
Base Rate or the Federal Funds Rate.

          "Utilization Fee" means the fees payable pursuant to Section 2.11(c).
           ---------------

          "Withdrawal Liability" means liability to a Multiemployer Plan as a
           --------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

          SECTION 1.02.  Classification of Loans and Borrowings.  For purposes
                         --------------------------------------
of this Agreement, Loans may be classified and referred to by Class (e.g., a
                                                                     ----
"Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type
                              ----
(e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and
 ----
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
                      ----                                       ----
"Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving
                                                ----
Borrowing").  Loans and Borrowings may also be identified by Currency.

          SECTION 1.03.  Terms Generally. The definitions of terms herein shall
                         ---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to
<PAGE>

                                      -26-

include such Person's successors and assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

          SECTION 1.04.  Accounting Terms; GAAP. Except as otherwise expressly
                         ----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
                                                                   --------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

          SECTION 1.05.  Currencies, Currency Equivalents.  At any time, any
                         --------------------------------
reference in the definition of the term "Approved Foreign Currency" or in any
other provision of this Agreement to the Currency of any particular nation means
the lawful currency of such nation at such time whether or not the name of such
Currency is the same as it was on the date hereof. Except as provided in
Sections 2.10(b) and 2.17(c), for purposes of determining (i) whether the amount
of any Borrowing, together with all other applicable Borrowings then outstanding
or to be borrowed at the same time as such Borrowing, would exceed the aggregate
amount of the Commitments or applicable Sub-Commitments, (ii) the aggregate
unutilized amount of the Commitments or either Sub-Commitment and (iii) the
aggregate outstanding principal amount of Borrowings, the outstanding principal
amount of any Borrowing that is denominated in any Foreign Currency shall be
deemed to be the Dollar Equivalent of the amount of the Foreign Currency of such
Borrowing determined as of the date of such Borrowing (determined in accordance
with the last sentence of the definition of the term "Borrowing"). Wherever in
this Agreement in connection with a Borrowing or Loan an amount, such as a
required minimum or multiple amount, is expressed in Dollars, but such Borrowing
or Loan is denominated in a Foreign Currency, such amount shall be the relevant
Foreign Currency Equivalent of such Dollar amount (rounded to the nearest 1,000
units of such Foreign Currency).
<PAGE>

                                      -27-

                                  ARTICLE II

                                  THE CREDITS

          SECTION 2.01.  Commitments. Subject to the terms and conditions set
                         -----------
forth herein:

          (a)  each Dollar Lender agrees to make Revolving Loans to the Borrower
     in Dollars from time to time during the Availability Period in an aggregate
     principal amount (i) that will not result in such Lender's Revolving Dollar
     Credit Exposure exceeding such Lender's Dollar Sub-Commitment and (ii) that
     will not result in the sum of the aggregate amount of the Revolving Credit
     Exposures of all of the Lenders plus the aggregate principal amount of all
                                     ----
     Pari Passu Debt then outstanding plus the aggregate principal amount (as
                                      ----
     defined in the definition of "Material Indebtedness" herein) of the
     obligations of the Borrower and its Subsidiaries under Hedging Agreements
     exceeding the Borrowing Base; and

          (b)  each Multicurrency Lender agrees to make Revolving Loans to the
     Borrower in Dollars or one or more Approved Foreign Currencies from time to
     time during the Availability Period in an aggregate principal amount (i)
     that will not result in such Lender's Revolving Multicurrency Credit
     Exposure exceeding such Lender's Multicurrency Sub-Commitment and (ii) that
     will not result in the sum of the aggregate amount of the Revolving Credit
     Exposures of all of the Lenders plus the aggregate principal amount of all
                                     ----
     Pari Passu Debt then outstanding plus the aggregate principal amount (as
                                      ----
     defined in the definition of "Material Indebtedness" herein) of the
     obligations of the Borrower or any of its Subsidiaries under Hedging
     Agreements exceeding the Borrowing Base.

Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

          In the event that any loans under the Existing Credit Agreement shall
be outstanding on the Effective Date, then on the Effective Date the Borrower
shall borrow Dollar Loans, and prepay Loans outstanding under the Existing
Credit Agreement, in such amounts as shall be necessary so that the Dollar Loans
are held hereunder pro rata in accordance with the respective Dollar Sub-
Commitments of the Dollar Lenders.  Any payments in respect of any Eurodollar
Loans under the Existing Credit Agreement made to any Lender party to the
Existing Credit Agreement that is received on any day other than the last day of
the Interest Period relating thereto shall be subject to indemnification by the
Borrower pursuant to the provisions of Section 2.15 of the Existing Credit
Agreement.

          SECTION 2.02.  Loans and Borrowings.
                         --------------------

          (a)  Obligations Several.  Each Revolving Loan shall be made as part
               -------------------
of a Borrowing consisting of Revolving Loans of the same Currency and Type made
by the applicable Lenders ratably in accordance with their respective applicable
Sub-Commitments.  The failure of any Lender to make any Loan required to be made
by it shall not relieve any other
<PAGE>

                                      -28-

Lender of its obligations hereunder; provided that the Commitments (and Sub-
                                     --------
Commitments) of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.

          (b)  Types.  Subject to Section 2.13, each Revolving Borrowing shall
               -----
be comprised entirely of ABR Loans, Federal Funds Loans or Eurocurrency Loans
denominated in a single Currency as the Borrower may request in accordance
herewith and each Swingline Loan shall be comprised of a Federal Funds Loan for
the period commencing on the date such Loan is made and ending on the fourth
Business Day thereafter, and from and after the fifth Business Day following
such date shall (automatically and without further action by any Person) be
comprised of an ABR Loan.  Each Federal Funds Loan and each ABR Loan (whether a
Revolving Loan or a Swingline Loan) shall be denominated in Dollars.  Each
Lender at its option may make any Eurocurrency Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any
                                                              --------
exercise of such option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement.

          (c)  Minimum Amounts.  At the commencement of each Interest Period for
               ---------------
any Eurocurrency Borrowing, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000, or (as
applicable) the Foreign Currency Equivalent of said amounts.  At the time that
each ABR Borrowing and each Federal Funds Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $5,000,000; provided that an ABR Borrowing or a Federal Funds
                          --------
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Total Dollar Sub-Commitment or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each
Swingline Loan shall be in an amount that is an integral multiple of $500,000
and not less than $1,000,000.  Borrowings of more than one Class, Currency and
Type may be outstanding at the same time; provided that there shall not at any
                                          --------
time be more than a total of nine Eurocurrency Borrowings outstanding.

          (d)  Certain Limits on Interest Periods.  Notwithstanding any other
               ----------------------------------
provision of this Agreement, the Borrower shall not be entitled to request, or
to elect to convert or continue, any Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date.

          (e)  Treatment of Loans Outstanding under Existing Credit Agreement.
               --------------------------------------------------------------
In the event that any loans under the Existing Credit Agreement shall remain
outstanding on the Effective Date, then on the Effective Date, the Borrower
shall prepay such loans in full from the proceeds of Revolving Loans hereunder,
and the Borrower shall pay to each Lender party to the Existing Credit
Agreement, all amounts that shall be owing to such Lender under Section 2.15 of
the Existing Credit Agreement as a result of such prepayment.

          SECTION 2.03.  Requests for Revolving Loan.
                         ---------------------------

          (a)  Notification to Administrative Agent.  To request a Revolving
               ------------------------------------
Loan, the Borrower shall notify the Administrative Agent of such request by
telephone (i) in the case of a Eurocurrency Borrowing denominated in an Approved
Foreign Currency, not later than 11:00 a.m., New York City time, five Business
Days before the date of the proposed Borrowing,
<PAGE>

                                      -29-

(ii) in the case of a Eurocurrency Borrowing denominated in Dollars, not later
than 11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing, (iii) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of the proposed
Borrowing or (iv) in the case of a Federal Funds Borrowing, not later than 12:00
noon, New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower.

          (b)  Content of Notification.  Each such telephonic and written
               -----------------------
Borrowing Request shall specify the following information in compliance with
Section 2.02:

          (i)   the aggregate amount and Currency of the requested Borrowing;

          (ii)  the date of such Borrowing, which shall be a Business Day;

          (iii) in the case of a Borrowing denominated in Dollars, whether such
     Borrowing is to be an ABR Borrowing, a Federal Funds Borrowing or a
     Eurocurrency Borrowing and whether such Borrowing shall constitute a
     utilization of the Dollar Sub-Commitment or Multicurrency Sub-Commitment;

          (iv)  in the case of a Eurocurrency Borrowing, the initial Interest
     Period to be applicable thereto, which shall be a period contemplated by
     the definition of the term "Interest Period"; and

          (v)   the location and number of the Borrower's account to which funds
     are to be disbursed, which shall comply with the requirements of Section
     2.06.

          (c)  Notice by Administrative Agent to Lenders.  Promptly following
               -----------------------------------------
receipt of a Borrowing Request in accordance with this Section 2.03, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of the amount and Currency of such Lender's Loan to be made as part of the
requested Borrowing.

          (d)  Certain Presumptions.  If no election as to the Currency of a
               --------------------
Borrowing is specified in a Borrowing Request, then the Borrower shall be deemed
to have requested a Borrowing denominated in Dollars. If no election as to the
Type of a Borrowing is specified, then the requested Borrowing shall be a
Federal Funds Borrowing unless an Approved Foreign Currency has been specified,
in which case the Borrower shall be deemed to have requested a Eurocurrency
Borrowing denominated in such Approved Foreign Currency. If no election as to
the Sub-Commitment of a Borrowing is specified, then the Borrower shall be
deemed to have requested a Borrowing under the Dollar Sub-Commitment, provided
                                                                      --------
that, if at such time the Dollar Sub-Commitment shall be fully drawn, then the
Borrower shall be deemed to have requested a Borrowing in Dollars under the
Multicurrency Sub-Commitment.
<PAGE>

                                      -30-

          SECTION 2.04.  Swingline Loans.
                         ---------------

          (a)  Obligation of Swingline Lender.  Subject to the terms and
               ------------------------------
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
to the Borrower from time to time during the Availability Period, in Dollars, in
an aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$15,000,000, (ii) the sum of the aggregate amount of the Revolving Credit
Exposures of all of the Lenders plus the aggregate principal amount of all Pari
                                ----
Passu Debt then outstanding plus the aggregate principal amount (as defined in
                            ----
the definition of "Material Indebtedness" herein) of the obligations of the
Borrower and its Subsidiaries under Hedging Agreements exceeding the Borrowing
Base or (iii) the sum of the total Revolving Dollar Credit Exposures exceeding
the Total Dollar Sub-Commitment; provided that the Swingline Lender shall not be
                                 --------
required to make a Swingline Loan to refinance an outstanding Swingline Loan.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

          (b)  Requests for Swingline Loans.  To request a Swingline Loan, the
               ----------------------------
Borrower shall notify the Administrative Agent of such request by telephone
(confirmed by telecopy), not later than 3:00 p.m., New York City time, on the
day of a proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan. The Administrative Agent will promptly advise the
Swingline Lender of any such notice received from the Borrower. The Swingline
Lender shall make each Swingline Loan available to the Borrower by means of a
credit to the general deposit account of the Borrower with the Swingline Lender
(or, in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the relevant
Issuing Bank) by 4:00 p.m., New York City time, on the requested date of such
Swingline Loan.

          (c)  Participation by Other Lenders.  The Swingline Lender may by
               ------------------------------
written notice given to the Administrative Agent not later than 10:00 a.m., New
York City time, on any Business Day require the Dollar Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding. Such notice shall specify the aggregate amount of Swingline Loans
in which Dollar Lenders will participate. Promptly upon receipt of such notice,
the Administrative Agent will give notice thereof to each Dollar Lender,
specifying in such notice such Lender's Applicable Dollar Percentage of such
Swingline Loan or Loans. Each Dollar Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swingline Lender, such Lender's
Applicable Dollar Percentage of such Swingline Loan or Loans. Each Dollar Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Dollar Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment
                                      ------- --------
obligations of the Lenders), and the
<PAGE>

                                      -31-

Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Dollar Lenders. The Administrative Agent shall notify
the Borrower of any participations in any Swingline Loan acquired pursuant to
this paragraph, and thereafter payments in respect of such Swingline Loan shall
be made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Dollar Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof. Notwithstanding
the foregoing, a Dollar Lender shall not have any obligation to acquire a
participation in a Swingline Loan pursuant to this paragraph if an Event of
Default shall have occurred and be continuing at the time such Swingline Loan
was made and such Lender shall have notified the Swingline Lender in writing, at
least one Business Day prior to the time such Swingline Loan was made, that such
Event of Default has occurred and that such Lender will not acquire
participations in Swingline Loans made while such Event of Default is
continuing.

          (d)  Swingline Loans Payable on Demand.  All Swingline Loans made
               ---------------------------------
hereunder shall be payable on demand of the Swingline Lender made at any time
upon the Borrower (and, if not so demanded sooner, in any event shall be payable
as provided in Section 2.09(a) hereof).

          SECTION 2.05.  Letters of Credit.
                         -----------------

          (a)  Obligation to Issue Letters of Credit.  Subject to the terms and
               -------------------------------------
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit by the Issuing Bank for its own account or for the account of any
Subsidiary Guarantor, either under the Dollar Sub-Commitments or under the
Multicurrency Sub-Commitments, in a form reasonably acceptable to the
Administrative Agent and the relevant Issuing Bank, at any time and from time to
time during the Availability Period.  In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.

          (b)  Requests for Letters of Credit.  To request the issuance of a
               ------------------------------
Letter of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
relevant Issuing Bank) to the relevant Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section
2.05), the Currency (which shall be Dollars or an Approved Foreign Currency) and
amount of such Letter of Credit, the name and address of the beneficiary
thereof,
<PAGE>

                                      -32-

whether such Letter of Credit is to be made under the Dollar Sub-Commitments or
the Multicurrency Sub-Commitments and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the relevant Issuing Bank, the Borrower also shall submit a letter of credit
application on the such Issuing Bank's standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i)
the Dollar LC Exposure shall not exceed $40,000,000 and the total Revolving
Dollar Credit Exposures shall not exceed the Total Dollar Sub-Commitment, (ii)
the Multicurrency LC Exposure shall not exceed $10,000,000 or the Foreign
Currency Equivalent thereof and the total Revolving Multicurrency Credit
Exposures shall not exceed the Total Multicurrency Sub-Commitment, (iii) the sum
of the aggregate amount of the Revolving Credit Exposures of all of the Lenders
plus the aggregate principal amount of all Pari Passu Debt then outstanding plus
----                                                                        ----
the aggregate principal amount (as defined in the definition of "Material
Indebtedness" herein) of the obligations of the Borrower and its Subsidiaries
under Hedging Agreements shall not exceed the Borrowing Base and (iv) the sum of
the total Revolving Credit Exposures shall not exceed the Total Commitment.

          (c)  Term of Letters of Credit.  Each Letter of Credit shall expire at
               -------------------------
or prior to the close of business on the earlier of (i) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and (ii)
the date that is five Business Days prior to the Maturity Date.

          (d)  Participations by Other Lenders.  By the issuance of a Letter of
               -------------------------------
Credit (or an amendment to a Letter of Credit increasing the amount thereof),
and without any further action on the part of the Issuing Bank or the Lenders,
(i) in the case of a Dollar Letter of Credit, the Issuing Bank hereby grants to
each Dollar Lender (other than the relevant Issuing Bank), and each Dollar
Lender hereby acquires from such Issuing Bank a participation in such Letter of
Credit equal to such Lender's Applicable Dollar Percentage, and (ii) in the case
of a Multicurrency Letter of Credit, the Issuing Bank hereby grants to each
Multicurrency Lender (other than the relevant Issuing Bank), and each
Multicurrency Lender hereby acquires from such Issuing Bank a participation in
such Letter of Credit equal to such Lender's Applicable Multicurrency Percentage
of the aggregate amount available to be drawn under such Letter of Credit.  In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account
of each Issuing Bank, such Lender's Applicable Dollar Percentage (in the case of
a Dollar Letter of Credit) and such Lender's Applicable Multicurrency Percentage
(in the case of a Multicurrency Letter of Credit) of each LC Disbursement made
by such Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph (e) of this Section 2.05, or of any reimbursement payment
required to be refunded to the Borrower for any reason.  Each Dollar Lender and
each Multicurrency Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Dollar Letters of Credit
and Multicurrency Letters of Credit, as the case may be, is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Dollar
<PAGE>

                                      -33-

Sub-Commitment or Multicurrency Sub-Commitment, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

          (e)  Obligation of Borrower to Reimburse.  If an Issuing Bank shall
               -----------------------------------
make any LC Disbursement in respect of a Letter of Credit, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement not later than 12:00 noon, New York City time, on
the date that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, New York City time, on (i)
the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt;
provided that the Borrower may, subject to the conditions to borrowing set forth
--------
herein, request in accordance with Section 2.03 or 2.04 that such payment be
financed with a Eurocurrency Borrowing of the Currency in which such Letter of
Credit is issued (or in the case of a Borrowing of Dollars) an ABR Revolving
Borrowing, a Federal Funds Borrowing or Swingline Loan in an equivalent amount
and, to the extent so financed, the Borrower's obligation to make such payment
shall be discharged and replaced by the resulting Eurocurrency Borrowing, ABR
Revolving Borrowing, Federal Funds Borrowing or Swingline Loan.  If the Borrower
fails to make such payment when due, the Administrative Agent shall notify each
Lender of the applicable LC Disbursement, the payment then due from the Borrower
in respect thereof and such Lender's Applicable Dollar Percentage or Applicable
Multicurrency Percentage, as the case may be, thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Dollar Percentage or Applicable Multicurrency Percentage, as the case
may be, of the payment then due from the Borrower, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and Section
2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
                  ------- --------
and the Administrative Agent shall promptly pay to the relevant Issuing Bank,
the amounts so received by it from the Lenders. Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
relevant Issuing Bank or, to the extent that Lenders have made payments pursuant
to this paragraph to reimburse such Issuing Bank, then to such Lenders and such
Issuing Bank, as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement
(other than the funding of Eurocurrency Loans, ABR Revolving Loans, Federal
Funds Loans or a Swingline Loan as contemplated above) shall not constitute a
Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

          (f)  Obligation of Borrower Absolute, Etc.  The Borrower's obligation
               ------------------------------------
to reimburse LC Disbursements as provided in paragraph (e) of this Section 2.05
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of:

          (i)  any lack of validity or enforceability of any Letter of Credit or
     this Agreement, or any term or provision therein;
<PAGE>

                                      -34-

          (ii)  any amendment or waiver of or any consent to departure from all
     or any of the provisions of any Letter of Credit or this Agreement;

          (iii) the existence of any claim, setoff, defense or other right that
     the Borrower, any other party guaranteeing, or otherwise obligated with,
     the Borrower, any Subsidiary or other Affiliate thereof or any other Person
     may at any time have against the beneficiary under any Letter of Credit,
     the Issuing Bank, the Administrative Agent or any Lender or any other
     Person, whether in connection with this Agreement or any other related or
     unrelated agreement or transaction;

          (iv)  any draft or other document presented under a Letter of Credit
     proving to be forged, fraudulent or invalid in any respect or any statement
     therein being untrue or inaccurate in any respect;

          (v)   payment by an Issuing Bank under a Letter of Credit against
     presentation of a draft or other document that does not comply strictly
     with the terms of such Letter of Credit; and

          (vi)  any other act or omission to act or delay of any kind of the
     Issuing Bank, the Lenders, the Administrative Agent or any other Person or
     any other event or circumstance whatsoever, whether or not similar to any
     of the foregoing, that might, but for the provisions of this Section 2.05,
     constitute a legal or equitable discharge of the Borrower's obligations
     hereunder.

Neither the Administrative Agent, the Lenders, the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
              --------
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by such Issuing Bank's failure to exercise the
standard of care agreed hereunder (as set forth in the next sentence) to be
applicable when determining whether drafts and other documents presented under a
Letter of Credit comply with the terms thereof. The parties hereto expressly
agree that the Issuing Bank shall be deemed to have exercised the agreed
standard of care in the absence of gross negligence or wilful misconduct on the
part of such Issuing Bank when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof, and shall be
deemed to have failed to exercise the agreed standard of care only if it shall
have engaged in gross negligence or wilful misconduct when making such
determination (as determined by a court of competent jurisdiction). In
furtherance of the foregoing and without limiting the generality thereof, it is
understood that the Issuing Bank may accept documents that appear on their face
to be in substantial compliance with the terms of a Letter of Credit without
responsibility for further investigation, regardless of any notice or
<PAGE>

                                      -35-

information to the contrary, and may make payment upon presentation of documents
that appear on their face to be in substantial compliance with the terms of such
Letter of Credit; provided that, notwithstanding the foregoing, the Issuing Bank
                  --------
shall have the right, in its sole discretion, to decline to accept such
documents and to make such payment if such documents are not in strict
compliance with the terms of such Letter of Credit.

          (g)  Notification by Issuing Bank to Administrative Agent.  The
               ----------------------------------------------------
Issuing Bank shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment under a Letter of Credit
issued by it. The Issuing Bank shall promptly notify the Administrative Agent
and the Borrower by telephone (confirmed by telecopy) of such demand for payment
and whether such Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such notice
            --------
shall not relieve the Borrower of its obligation to reimburse the Issuing Bank
and the relevant participating Lenders with respect to any such LC Disbursement.

          (h)  Interest on LC Disbursements.  If an Issuing Bank shall make any
               ----------------------------
LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement
in full on the date such LC Disbursement is made, the unpaid amount thereof
(which, in the case of Multicurrency Letters of Credit, shall be converted into
Dollars) shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Borrower reimburses such
LC Disbursement, at the rate per annum then applicable to ABR Loans; provided
                                                                     --------
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section 2.05, then Section 2.12(e) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
relevant Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to paragraph (e) of this Section 2.05 to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.

          (i)  Replacement of Issuing Bank.  The Issuing Bank may be replaced at
               ---------------------------
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

          (j)  Cash Collateral.  If (i) any Event of Default shall have occurred
               ---------------
and be continuing, (ii) the aggregate amount of Revolving Dollar Credit Exposure
of all Dollar Lenders hereunder exceeds the Total Dollar Sub-Commitment, (iii)
the aggregate amount of Revolving
<PAGE>

                                      -36-

Multicurrency Credit Exposure of all Multicurrency Lenders hereunder exceeds the
Total Multicurrency Sub-Commitment or (iv) the sum of the aggregate amount of
Revolving Credit Exposure of all Lenders hereunder plus the aggregate principal
                                                   ----
amount of all Pari Passu Debt then outstanding plus the aggregate principal
                                               ----
amount (as defined in the definition of "Material Indebtedness" herein) of the
obligations of the Borrower and its Subsidiaries under Hedging Agreements
exceeds the then-current Borrowing Base on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders (or, if
the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in Dollars equal to (w) the LC
Exposure as of such date, converting the aggregate Multicurrency LC Exposure
into the Dollar Equivalent thereof at that date (in the case of the foregoing
clause (i)), (x) the amount of the relevant excess (in the case of the foregoing
clauses (ii) or (iii)) or (y) the lesser of the Revolving Credit Exposure or the
amount of the relevant excess (in the case of the foregoing clause (iv)), plus
(in each of the cases referred to in the foregoing clauses (i), (ii), (iii), and
(iv)) any accrued and unpaid interest thereon; provided that the obligation to
                                               --------
deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (h) or (i) of Article VII. Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance
of the obligations of the Borrower under this Agreement.

          The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrower's risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse the
relevant Issuing Bank for LC Disbursements for which it has not been reimbursed
and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Obligors under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default or the renewal of
a Letter of Credit or an excess of the Revolving Credit Exposure (either in and
of itself or together with the Pari Passu Debt), as the case may be, such amount
(to the extent not applied as aforesaid) shall be returned to the Borrower
within three Business Days after all Events of Default have been cured or waived
or, in the case of a renewal of a Letter of Credit that would cause the
expiration date of such Letter of Credit to extend beyond the Maturity Date,
after all amounts drawn or able to be drawn under Letters of Credit have been
reimbursed by the Borrower or, in the case of an excess of the Revolving Credit
Exposure, after such excess has been eliminated.

          (k)  Certain Existing Letters of Credit.  To the extent that there are
               ----------------------------------
outstanding on the Effective Date pursuant to the Existing Credit Agreement one
or more letters of credit issued
<PAGE>

                                      -37-

by Chase (as the "Issuing Lender" thereunder) then, on the Effective Date, each
of such letters of credit is hereby designated a "Dollar Letter of Credit" under
and for all purposes of this Agreement. In that connection, the Borrower hereby
represents and warrants to the Issuing Lender, each Dollar Lender and the
Administrative Agent that each such letter of credit satisfies the requirements
of this Section 2.05 (including paragraph (c) above).

          SECTION 2.06.  Funding of Borrowings.
                         ---------------------

          (a)  Manner of Funding.  Each Lender shall make each Loan to be made
               -----------------
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., Local Time in the location of the Administrative
Agent's Account for the relevant Currency, to the Administrative Agent's Account
for such Currency; provided that Swingline Loans shall be made as provided in
                   --------
Section 2.04.  The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent and designated
by the Borrower in the applicable Borrowing Request; provided that Eurocurrency
                                                     --------
Loans, ABR Revolving Loans or Federal Funds Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be
remitted by the Administrative Agent to the relevant Issuing Bank.

          (b)  Presumption by Administrative Agent.  Unless the Administrative
               -----------------------------------
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section 2.06 and may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. In such event, if a
Lender has not in fact made its share of the applicable Borrowing available to
the Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) for the first three Business Days, (A) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation for Loans in the applicable Currency or (B) in the
case of the Borrower, the Federal Funds Rate (or, if such Loan is denominated in
an Approved Foreign Currency, at such other rate as the Administrative Agent
shall determine is appropriate in the circumstances) and (ii) thereafter, the
interest rate applicable to ABR Loans.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.

          SECTION 2.07.  Interest Elections.
                         ------------------

          (a)  Interest Election Requests.  Each Revolving Borrowing initially
               --------------------------
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurocurrency Revolving Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurocurrency Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section 2.07; provided,
                                                                 --------
however, that (i) a
-------
<PAGE>

                                      -38-

Borrowing denominated in one Currency may not be converted to a Borrowing in a
different Currency and (ii) a Eurocurrency Borrowing denominated in an Approved
Foreign Currency may not be converted to a Borrowing of a different Type.
Subject to the foregoing, the Borrower may elect different options with respect
to different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section 2.07 shall not apply to Swingline Borrowings,
which may not be converted or continued.

          (b)  Notification by Borrower.  To make an election pursuant to this
               ------------------------
Section 2.07, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the
Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.

          (c)  Content of Notifications.  Each telephonic and written Interest
               ------------------------
Election Request shall specify the following information in compliance with
Section 2.02:

          (i)  the Borrowing to which such Interest Election Request applies
     and, if different options are being elected with respect to different
     portions thereof, the portions thereof to be allocated to each resulting
     Borrowing (in which case the information to be specified pursuant to
     clauses (iii) and (iv) below shall be specified for each resulting
     Borrowing);

          (ii)  the effective date of the election made pursuant to such
     Interest Election Request, which shall be a Business Day;

          (iii) whether the resulting Borrowing is to be an ABR Borrowing, a
     Federal Funds Borrowing or a Eurocurrency Borrowing; and

          (iv)  if the resulting Borrowing is a Eurocurrency Borrowing, the
     Interest Period to be applicable thereto after giving effect to such
     election, which shall be a period contemplated by the definition of the
     term "Interest Period".

          If any such Interest Election Request requests a Eurocurrency
Borrowing but does not specify an Interest Period, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration.

          (d)  Notice by Administrative Agent to Lenders.  Promptly following
               -----------------------------------------
receipt of an Interest Election Request, the Administrative Agent shall advise
each applicable Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.

          (e)  Certain Presumptions.  If the Borrower fails to deliver a timely
               --------------------
Interest Election Request with respect to a Eurocurrency Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, (i) if such
<PAGE>

                                      -39-

Borrowing is denominated in Dollars, at the end of such Interest Period such
Borrowing shall be converted to a Federal Funds Borrowing, and (ii) if such
Borrowing is denominated in a Foreign Currency, the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Notwithstanding any
contrary provision hereof, if an Event of Default has occurred and is continuing
and the Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as an Event of Default is continuing (A) no
outstanding Borrowing denominated in Dollars may be converted to or continued as
a Eurocurrency Borrowing, (B) unless repaid, each Eurocurrency Borrowing
denominated in Dollars shall be converted to an ABR Borrowing at the end of the
Interest Period therefor and (C) no outstanding Eurocurrency Borrowing
denominated in an Approved Foreign Currency may have an Interest Period of more
than one month's duration.

          SECTION 2.08.  Termination or Reduction of Commitments.
                         ---------------------------------------

          (a)  Scheduled Termination.  Unless previously terminated, the
               ---------------------
Commitments shall terminate on the Maturity Date.

          (b)  Voluntary Reductions.  The Borrower may at any time terminate, or
               --------------------
from time to time reduce, the Commitments (and Sub-Commitments); provided that
                                                                 --------
(i) each reduction of the Commitments (and of either Sub-Commitment) shall be in
an amount that is an integral multiple of $5,000,000 and not less than
$10,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments
(and either Sub-Commitment) if, after giving effect to any concurrent prepayment
of the Loans in accordance with Section 2.10, the sum of the Revolving Credit
Exposures would exceed the Total Commitment, the sum of the Revolving Dollar
Credit Exposure would exceed the Total Dollar Sub-Commitment or the sum of the
Revolving Multicurrency Credit Exposures would exceed the Total Multicurrency
Sub-Commitment.
<PAGE>

                                      -40-

          (c)  Notifications, Etc.  The Borrower shall notify the Administrative
               ------------------
Agent of (i) any election to terminate or reduce the Commitments under paragraph
(b) of this Section 2.08, and (ii) in the case of a reduction, the amount of
such reduction (if any) to be allocated to the Dollar Sub-Commitment and
Multicurrency Sub-Commitment hereunder, at least three Business Days prior to
the effective date of such termination or reduction, specifying such election,
the aggregate amount of a reduction and any allocation as aforesaid, and the
effective date thereof.  Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof.  Each
notice delivered by the Borrower pursuant to this Section 2.08 shall be
irrevocable; provided that a notice of termination of the Commitments delivered
             --------
by the Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied.  Any termination or
reduction of the Commitments (and of Sub-Commitments) shall be permanent.  Each
reduction of the Commitments and Sub-Commitments shall be made ratably among the
Lenders in accordance with their respective Commitments and Sub-Commitments, as
the case may be.

          SECTION 2.09.  Repayment of Loans; Evidence of Debt.
                         ------------------------------------

          (a)  Repayment of Loans.  The Borrower hereby unconditionally promises
               ------------------
to pay (i) to the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to
the Swingline Lender the then unpaid principal amount of each Swingline Loan on
the earlier of the date such repayment is demanded pursuant to Section 2.04(d)
hereof, the Maturity Date and the first date after such Swingline Loan is made
that is the 15th or last day of a calendar month and is at least two Business
Days after such Swingline Loan is made; provided that on each date that a
                                        --------
Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then
outstanding.

          (b)  Maintenance of Accounts by Lenders.  Each Lender shall maintain
               ----------------------------------
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts and Currency of principal and interest
payable and paid to such Lender from time to time hereunder.

          (c)  Maintenance of Accounts by Administrative Agent.  The
               -----------------------------------------------
Administrative Agent shall maintain accounts in which it shall record (i) the
amount and Currency of each Loan made hereunder, the Sub-Commitment, Class and
Type thereof and the Interest Period applicable thereto, (ii) the amount and
Currency of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) the amount and
Currency of any sum received by the Administrative Agent hereunder for the
account of the Lenders and each Lender's share thereof.

          (d)  Effect of Entries.  The entries made in the accounts maintained
               -----------------
pursuant to paragraph (b) or (c) of this Section 2.09 shall be prima facie
                                                               ----- -----
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
--------
such accounts or any error therein shall not in any manner
<PAGE>

                                      -41-

affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.

          (e)  Promissory Notes.  Any Lender may request that Loans of any Sub-
               ----------------
Commitment made by it be evidenced by a promissory note.  In such event, the
Borrower shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in a form approved by the Administrative
Agent.  Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section
10.04) be represented by one or more promissory notes in such form payable to
the order of the payee named therein (or, if such promissory note is a
registered note, to such payee and its registered assigns).

          SECTION 2.10.  Prepayment of Loans.
                         -------------------

          (a)  Voluntary Prepayments.  The Borrower shall have the right at any
               ---------------------
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with paragraph (b) of this Section 2.10 and
provided that the aggregate principal amount of any prepayment that does not
result in the prepayment of a Borrowing in full shall be in an integral multiple
of $1,000,000 (or the Foreign Currency Equivalent of such amount).

          (b)  Mandatory Prepayments.  The Borrower shall from time to time
               ---------------------
prepay the Revolving Loans and Swingline Loans (and/or provide cover for LC
Exposure as specified in Section 2.05(j)) in such amounts as shall be necessary
so that at all times the sum of the aggregate outstanding amount of Revolving
Credit Exposure plus the aggregate principal amount of Pari Passu Debt then
                ----
outstanding plus the aggregate principal amount (as defined in the definition of
            ----
"Material Indebtedness" herein) of the obligations of the Borrower and its
Subsidiaries under Hedging Agreements shall not exceed the Borrowing Base, such
amounts to be applied, first, to Swingline Loans outstanding, second, to
Revolving Loans outstanding and, third, as cover for LC Exposure outstanding.

          On each date on which a Borrowing Base Certificate is delivered
pursuant to Section 5.01(f), the Borrower shall (as provided in Section 5.01(f))
determine the aggregate Revolving Credit Exposure (taking into account the
Dollar Equivalent of the aggregate amount of Revolving Credit Loans denominated
in any Approved Foreign Currency), and shall provide the Administrative Agent
with a copy of such determination.  In addition, promptly upon the receipt by
the Administrative Agent of a Currency Valuation Notice (as defined below), the
Administrative Agent shall (and at any time at the Administrative Agent's
option, the Administrative Agent may) similarly determine the aggregate
Revolving Credit Exposure.  Upon receipt of any such determination from the
Borrower, and upon its making any such determination, the Administrative Agent
shall promptly notify the Lenders thereof (and in the case of any such
determination by the Administrative Agent, the Borrower).  If on the date of any
such determination the aggregate Revolving Credit Exposure exceeds 105% of the
aggregate amount of the Commitments as then in effect, the Borrower shall, if
requested by the Required Lenders (through the Administrative Agent), prepay the
Revolving Loans and Swingline Loans (and/or provide cover for LC Exposure as
specified in Section 2.05(j)) in such amounts as shall be necessary so that
after giving effect thereto, the aggregate Revolving Credit Exposure does
<PAGE>

                                      -42-

not exceed the Commitments. For purposes hereof, "Currency Valuation Notice"
                                                  -------------------------
means a notice given by the Required Lenders stating that such notice is a
"Currency Valuation Notice" and requesting that the Administrative Agent
determine the Dollar Equivalent of the aggregate Revolving Credit Exposure. The
Administrative Agent shall not be required to make more than one valuation
determination pursuant to a Currency Valuation Notice during any rolling three-
month period.

          For the purpose of the determinations in this paragraph (b), the
outstanding principal amount of any Loan that is denominated in an Approved
Foreign Currency shall be deemed to be the Dollar Equivalent of the amount in
the Currency of such Loan, determined as of the date of such determination or,
in the case of a Currency Valuation Notice received by the Administrative Agent
prior to 11:00 a.m., New York City time, on a Business Day, on such Business Day
or, in the case of a Currency Valuation Notice otherwise received, on the first
Business Day after such Currency Valuation Notice is received.

          (c)  Notification of Prepayments.  The Borrower shall notify the
               ---------------------------
Administrative Agent (and, in the case of prepayment of a Swingline Loan, the
Swingline Lender) by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing,
not later than 11:00 a.m., New York City time (or, in the case of a Borrowing
denominated in an Approved Foreign Currency, 11:00 a.m., London time), three
Business Days before the date of prepayment, (ii) in the case of prepayment of
an ABR Revolving Borrowing or a Federal Funds Revolving Borrowing, not later
than 11:00 a.m., New York City time, one Business Day before the date of
prepayment or (iii) in the case of prepayment of a Swingline Loan, not later
than 12:00 noon, New York City time, on the date of prepayment.  Each such
notice shall be irrevocable and shall identify the Borrowing to be prepaid
(specifying the Currency thereof), the prepayment date and the principal amount
of such Borrowing or portion thereof to be prepaid; provided that, if a notice
                                                    --------
of prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.08, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.08.  Promptly following receipt of any such notice relating to a
Revolving Borrowing, the Administrative Agent shall advise the applicable
Lenders of the contents thereof.  Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.12.

          SECTION 2.11.  Fees.
                         ----

          (a)  Commitment Fees.  The Borrower agrees to pay to the
               ---------------
Administrative Agent for the account of each Lender a Commitment Fee, which
shall accrue at the Applicable Rate on the daily unused amount of the Commitment
of such Lender during the period from and including the date hereof to but
excluding the date on which such Commitment terminates.  For purposes of this
Section 2.11(a) only, Swingline Loans shall not be deemed to constitute a use of
any Lender's Commitment.  Accrued Commitment Fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the
<PAGE>

                                      -43-

Commitments terminate, commencing on the first such date to occur after the date
hereof; provided that any Commitment Fees accruing after the date on which the
        --------
Commitments terminate shall be payable on demand. All Commitment Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

          (b)  Letter of Credit Fees.  The Borrower agrees to pay (i) to the
               ---------------------
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
Applicable Rate for Letters of Credit on the average daily amount of such
Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender's Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, (ii) to the
relevant Issuing Bank a fronting fee, which shall accrue at the rate of 1/8 of
1% per annum on the average daily amount of such Issuing Bank's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure, and (iii) to the relevant Issuing Bank its
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder.  Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
                --------
which the Commitments terminate and any such fees accruing after the date on
which the Commitments terminate shall be payable on demand.  Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable within 10
days after demand.  All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

          (c)  Utilization Fees.  The Borrower agrees to pay to the to the
               ----------------
Administrative Agent for the account of each Lender a Utilization Fee which
shall accrue, for each day on which the aggregate Revolving Credit Exposure of
all of the Lenders is greater than 50% of the Total Commitment, at a rate per
annum equal to 1/8 of 1% of the Revolving Credit Exposure of such Lender on such
date.  Accrued Utilization Fees (if any) shall be payable in arrears on the last
day of March, June, September and December of each year and on the date on which
the Commitments terminate, commencing on the first such date to occur after the
date hereof; provided that any Utilization Fees accruing after the date on which
             --------
the Commitments terminate shall be payable on demand.  All Utilization Fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).

          (d)  Administrative Agent's Fees.  The Borrower agrees to pay to the
               ---------------------------
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.
<PAGE>

                                      -44-

          (e)  Manner of Payment.  All fees payable hereunder shall be paid on
               -----------------
the dates due, in Dollars and immediately available funds, to the Administrative
Agent (or to the relevant Issuing Bank, in the case of fees payable to it) for
distribution, in the case of Commitment Fees, Utilization Fees and participation
fees, to the Lenders.  Fees paid shall not be refundable under any
circumstances.

          SECTION 2.12.  Interest.
                         --------

          (a)  ABR Borrowings.  The Loans comprising each ABR Borrowing
               --------------
(including each Swingline Loan comprised of an ABR Borrowing in accordance with
Section 2.02(b)) shall bear interest at the Alternate Base Rate plus the
Applicable Rate.

          (b)  Federal Funds Borrowings.  The Loans comprising each Federal
               ------------------------
Funds Borrowing (including each Swingline Loan comprised of a Federal Funds
Borrowing in accordance with Section 2.02(b)) shall bear interest at the Federal
Funds Rate plus the Applicable Rate.

          (c)  Eurocurrency Borrowings.  The Loans comprising each Eurocurrency
               -----------------------
Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Rate.

          (d)  Default Rate.  Notwithstanding the foregoing, if any principal of
               ------------
or interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section 2.12 or (ii) in the case of any other
amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of
this Section 2.12.

          (e)  Interest Payment Dates.  Accrued interest on each Loan shall be
               ----------------------
payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (i) interest accrued pursuant to
                                --------
paragraph (d) of this Section 2.12 shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan or a Federal Funds Revolving Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurocurrency Revolving Loan prior to the end of
the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.

          (f)  Computation.  All interest hereunder shall be computed on the
               -----------
basis of a year of 360 days, except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  The applicable Alternate
Base Rate, Federal Funds Rate and Adjusted LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
<PAGE>

                                      -45-

          SECTION 2.13.  Alternate Rate of Interest. If prior to the
                         --------------------------
commencement of any Interest Period for a Eurocurrency Borrowing (the Currency
of such Borrowing being herein called the "Affected Currency"):
                                           -----------------

          (a)  the Administrative Agent determines (which determination shall be
     conclusive absent manifest error) that adequate and reasonable means do not
     exist for ascertaining the Adjusted LIBO Rate for the Affected Currency for
     such Interest Period; or

          (b)  the Administrative Agent is advised by Lenders of the affected
     Sub-Commitment having more than 50% of such Sub-Commitment that the
     Adjusted LIBO Rate for the Affected Currency for such Interest Period will
     not adequately and fairly reflect the cost to such Lenders of making or
     maintaining their Loans included in such Borrowing for such Interest
     Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
affected Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and such Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or the
continuation of any Borrowing as, a Eurocurrency Borrowing denominated in the
Affected Currency shall be ineffective and, if the Affected Currency is Dollars,
such Borrowing (unless prepaid) shall be continued as, or converted to, a
Federal Funds Borrowing, (ii) if the Affected Currency is Dollars and any
Borrowing Request requests a Eurocurrency Borrowing denominated in Dollars, such
Borrowing shall be made as a Federal Funds Borrowing and (iii) if the Affected
Currency is a Foreign Currency, any Borrowing Request that requests a
Eurocurrency Borrowing denominated in the Affected Currency shall be
ineffective.

          SECTION 2.14.  Increased Costs.
                         ---------------

          (a)  Change in Law.  If any Change in Law shall:
               -------------

          (i)  impose, modify or deem applicable any reserve, special deposit or
     similar requirement against assets of, deposits with or for the account of,
     or credit extended by, any Lender (except any such reserve requirement
     reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

          (ii) impose on any Lender or any Issuing Bank or the London interbank
     market any other condition affecting this Agreement or Eurocurrency Loans
     made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or Issuing
Bank hereunder (whether of principal, interest or otherwise), then the Borrower
will pay to such Lender or the relevant Issuing Bank, as the case may be, in
Dollars, such additional
<PAGE>

                                      -46-

amount or amounts as will compensate such Lender or the relevant Issuing Bank
for such additional costs incurred or reduction suffered.

          (b)  Capital Requirements.  If any Lender or Issuing Bank determines
               --------------------
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender's or Issuing Bank's capital
or on the capital of such Lender's or Issuing Bank's holding company, if any, as
a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender, such Issuing Bank or such
Lender's or Issuing Bank's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's or such Issuing Bank's
policies and the policies of such Lender's or such Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or Issuing Bank, as the case may be, in Dollars, such
additional amount or amounts as will compensate such Lender or Issuing Bank or
such Lender's or Issuing Bank's holding company for any such reduction suffered.

          (c)  Certificate from Lenders, Etc. A certificate of a Lender or an
               -----------------------------
Issuing Bank setting forth the amount or amounts, in Dollars, necessary to
compensate such Lender or Issuing Bank or its holding company, as the case may
be, as specified in paragraph (a) or (b) of this Section 2.14 shall be delivered
to the Borrower and shall be conclusive absent manifest error.  The Borrower
shall pay such Lender or Issuing Bank, as the case may be, the amount shown as
due on any such certificate within 10 days after receipt thereof.

          (d)  Retroactive Requests.  Failure or delay on the part of any Lender
               --------------------
or Issuing Bank to demand compensation pursuant to this Section 2.14 shall not
constitute a waiver of such Lender's or Issuing Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
              --------
Lender or an Issuing Bank pursuant to this Section 2.14 for any increased costs
or reductions incurred more than 270 days prior to the date that such Lender or
Issuing Bank, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's or
Issuing Bank's intention to claim compensation therefor; provided further that,
                                                         -------- -------
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.

          SECTION 2.15.  Break Funding Payments. In the event of (a) the payment
                         ----------------------
of any principal of any Eurocurrency 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 Eurocurrency Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.10(c) and is revoked in accordance therewith) or (d) the
assignment of any Eurocurrency Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the
<PAGE>

                                      -47-

principal amount of such Loan, denominated in the Currency of such Loan, had
such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, 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 for such Loan), over (ii) the amount of interest which would accrue on
                       ----
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for deposits of a
comparable amount and period, denominated in such Currency from other banks in
the Eurocurrency market.  A certificate of any Lender setting forth any amount
or amounts that such Lender is entitled to receive pursuant to this Section 2.15
shall be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

          SECTION 2.16.  Taxes.
                         -----

          (a)  Payment for Taxes.  Any and all payments by or on account of any
               -----------------
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
                                                    --------
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.16) the Administrative Agent,
Lender or Issuing Bank (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 deducted
to the relevant Governmental Authority in accordance with applicable law.

          (b)  Other Taxes.  In addition, the Borrower shall pay any Other Taxes
               -----------
to the relevant Governmental Authority in accordance with applicable law.

          (c)  Indemnification by Borrower.  The Borrower shall indemnify the
               ---------------------------
Administrative Agent, each Lender and each Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or such Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section
2.16) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive
absent manifest error.

          (d)  Receipts.  As soon as practicable after any payment of
               --------
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
<PAGE>

                                      -48-

          (e)  Exemptions.  Upon becoming a party to this Agreement, each
               ----------
Foreign Lender represents and warrants to the Borrower that it is, on the date
such Foreign Lender becomes a party hereto, entitled to complete exemption from
withholding tax under the laws of the jurisdiction in which the Borrower is
located, or under any treaty to which such jurisdiction is a party, for payments
made to it by the Borrower hereunder.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate.

          (f)  Refunds or Credits.  If any Lender or the Administrative Agent
               ------------------
(i) receives a refund from a taxation authority in respect of any Indemnified
Taxes or Other Taxes with respect to which the Borrower has paid additional
amounts hereunder or (ii) claims any credit or other tax benefit (such credit to
include any increase in any foreign tax credit) with respect to any Taxes or
Other Taxes for which it has been indemnified by the Borrower and with respect
to which the Borrower has paid additional amounts hereunder which refund, credit
or other tax benefit in the sole judgment of such Lender or the Administrative
Agent is directly attributable to any such Indemnified Tax or Other Tax paid,
such Lender or the Administrative Agent shall promptly pay over to the Borrower
the amount of such refund, credit or other tax benefit (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower with
respect to the Indemnified Taxes or Other Taxes giving rise to such refund or
credit), net of all out-of-pocket expenses (including any taxes on a refund or
on interest received or credited) which such Lender or the Administrative Agent
certifies that it has reasonably determined to have been incurred in connection
with obtaining such refund, credit or other tax benefit; provided, however, that
                                                         --------  -------
(i) the Borrower agrees to repay, upon the request of such Lender or the
Administrative Agent, the amount paid over to the Borrower (plus penalties,
interest or other charges) to such Lender or the Administrative Agent in the
event such Lender or the Administrative Agent is required to repay such refund
or credit to such tax authority, (ii) such Lender or the Administrative Agent,
as the case may be, shall have no obligation to cooperate with respect to any
contest (or continue to cooperate with respect to any contest), or to seek or
claim any refund, credit or other tax benefit if such Lender or the
Administrative Agent determines that its interest would be materially adversely
affected by so cooperating (or continuing to cooperate) or by seeking or
claiming any such refund, credit or other tax benefit and (iii) the Borrower
shall not have any right to examine the tax returns or other records of any
Lender or the Administrative Agent or to obtain any information with respect
thereto by reason of the provisions of this Section or any judgment or
determination made by any Lender or the Administrative Agent pursuant to this
Section.

          SECTION 2.17.  Payments Generally; Pro Rata Treatment; Sharing of Set-
                         ------------------------------------------------------
offs.
----

          (a)  Manner of Payment.  The Borrower shall make each payment required
               -----------------
to be made by it hereunder and under the other Loan Documents (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts
payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon,
Local Time in the location of the Administrative Agent's
<PAGE>

                                      -49-

Account for the relevant Currency, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at the Administrative Agent's Account for the relevant
Currency, except that payments to be made directly to an Issuing Bank or the
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.14, 2.15, 2.16 and 10.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute, in like Currency
and funds, any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.

          (b)  Payments on Non-Business Days.  If any payment hereunder shall be
               -----------------------------
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.

          (c)  Currency of Payments.  All amounts owing under this Agreement
               --------------------
(including Commitment Fees, Utilization Fees, payments required under Section
2.14, and payments required under Section 2.15 relating to any Loan denominated
in Dollars) or under any other Loan Document (except to the extent otherwise
provided therein) are payable in Dollars, provided that all payments of
                                          --------
principal of and interest on any Loan denominated in an Approved Foreign
Currency, and all payments relating to such Loans under Section 2.15 should be
payable in such Foreign Currency.  Notwithstanding the foregoing, if the
Borrower shall fail to pay any principal of any Loan when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), the unpaid
portion of such Loan shall, if such Loan is not denominated in Dollars,
automatically be redenominated in Dollars on the due date thereof (or, if such
due date is a day other than the last day of the Interest Period therefor, on
the last day of such Interest Period) in an amount equal to the Dollar
Equivalent thereof on the date of such redenomination and such principal shall
be payable on demand; and if the Borrower shall fail to pay any interest on any
Loan that is not denominated in Dollars, such interest shall automatically be
redenominated in Dollars on the due date therefor (or, if such due date is a day
other than the last day of the Interest Period therefor, on the last day of such
Interest Period) in an amount equal to the Dollar Equivalent thereof on the date
of such redenomination and such interest shall be payable on demand.

          (d)  Pro Rata Treatment.  Except to the extent otherwise provided
               ------------------
herein: (i) each Borrowing of Dollar Loans or Multicurrency Loans in a
particular Currency from the Lenders under Section 2.01 hereof shall be made
from the relevant Lenders, each payment of Commitment Fees, Utilization  Fees or
of participation fees under Section 2.11 hereof in respect of the Dollar Sub-
Commitment or the Multicurrency Sub-Commitment shall be made for account of the
relevant Lenders, and each termination or reduction of the amount of the
Commitment, Dollar Sub-Commitment or Multicurrency Sub-Commitment under Section
2.08 hereof shall be applied to the respective Commitments and Sub-Commitments
of the relevant Lenders, pro rata according to the amounts of their respective
Commitments or Sub-Commitments; (ii) the making, conversion and continuation of
Loans of a particular Type and Currency (other than conversions provided for by
Section 2.13 hereof) shall be made pro rata among the relevant
<PAGE>

                                      -50-

Lenders according to the amounts of their respective Sub-Commitments (in the
case of the making of Loans) or their respective Loans (in the case of
conversions and continuations of Loans) and the then current Interest Period for
each Eurocurrency Loan, as applicable, shall be coterminous; (iii) each payment
or prepayment of principal of Dollar Loans or of Multicurrency Loans by the
Borrowers shall be made for account of the Dollar Lenders and the Multicurrency
Lenders, as applicable, pro rata in accordance with the respective unpaid
principal amounts of the Dollar Loans and Multicurrency Loans held by them; and
(iv) each payment of interest on Dollar Loans and Multicurrency Loans by the
Borrowers shall be made for account of the relevant Lenders pro rata in
accordance with the amounts of interest on such Dollar Loans and Multicurrency
Loans then due and payable to the respective Lenders.

          (e)  Manner of Application if Insufficient Funds.  If at any time
               -------------------------------------------
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.

          (f)  Sharing of Payments.  If any Lender shall, by exercising any
               -------------------
right of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Revolving Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving Loans and
participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans and participations in LC Disbursements and
Swingline Loans of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Revolving Loans and participations in LC Disbursements and Swingline Loans;
provided that (i) if any such participations are purchased and all or any
--------
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made by any Obligor pursuant to and in
accordance with the express terms of this Agreement or the other Loan Documents
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply).  Each Obligor consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Obligor in the amount
of such participation.

          (g)  Presumption by Administrative Agent.  Unless the Administrative
               -----------------------------------
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the
<PAGE>

                                      -51-

Administrative Agent for the account of the Lenders or the Issuing Banks
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the relevant Issuing Bank, as the case may be, the amount due. In such event, if
the Borrower has not in fact made such payment, then each of the Lenders or the
Issuing Banks, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

          (h)  Withholding by Administrative Agent of Certain Payments.  If any
               -------------------------------------------------------
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.04(c), 2.05(d) or (e), 2.06(b) or 2.17(g), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.

          SECTION 2.18.  Mitigation Obligations; Replacement of Lenders.
                         ----------------------------------------------

          (a)  Change of Lending office.  If any Lender requests compensation
               ------------------------
under Section 2.14, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.16, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.14 or 2.16 as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

          (b)  Replacement of Lenders.  If any Lender requests compensation
               ----------------------
under Section 2.14, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.16, or if any Lender defaults in its obligation to fund
Loans hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
             --------
written consent of the Administrative Agent (and, if a Commitment is being
assigned, the Issuing Bank and the Swingline Lender), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements and Swingline Loans, accrued interest thereon, accrued fees
<PAGE>

                                      -52-

and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

                                  ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Lenders that:

          SECTION 3.01.  Organization; Powers. Each of the Borrower and its
                         --------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

          SECTION 3.02.  Authorization; Enforceability. The Transactions are
                         -----------------------------
within each Obligor's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of this Agreement
and the other Loan Documents has been duly executed and delivered by each
Obligor and constitutes a legal, valid and binding obligation of each Obligor,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

          SECTION 3.03.  Governmental Approvals; No Conflicts. The Transactions
                         ------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except for filings and
recordings in respect of the Liens created pursuant to the Security Documents,
(b) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
any of its Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any of its Subsidiaries, and
(d) except for the Lien created by the Security Documents, will not result in
the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries.
<PAGE>

                                      -53-

          SECTION 3.04.  Financial Condition; No Material Adverse Change.
                         -----------------------------------------------

          (a)  Financial Statements.  The Borrower has heretofore furnished to
               --------------------
the Lenders (i) its consolidated balance sheet, statements of income,
stockholders equity and cash flows and pro forma information as of and for the
fiscal year ended May 2, 1999, reported on by Arthur Andersen LLP, independent
public accountants and (ii) its consolidated balance sheet, statements of
income, stockholders equity and cash flows and pro forma information as of and
for the fiscal period ended August 1, 1999.  Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.

          (b)  No Material Adverse Change.  Since May 2, 1999, there has been no
               --------------------------
event, development or circumstance that has had or could reasonably be expected
to have a Material Adverse Effect, except as reflected in the financial
statements referred to in Section 3.04(a) as of and for the fiscal period ended
August 1, 1999.

          (c)  No Material Undisclosed Liabilities.  The Borrower does not have
               -----------------------------------
on the date of this Agreement any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments in each case that are material, except as
referred to or reflected in the balance sheets as at May 2, 1999 and August 1,
1999 referred to above.

          SECTION 3.05.  Properties.
                         ----------

          (a)  Title to Properties.  Each of the Borrower and its Subsidiaries
               -------------------
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do not
materially interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.

          (b)  Intellectual Property.  Each of the Borrower and its Subsidiaries
               ---------------------
owns, or is licensed to use, all trademarks, trade names, copyrights, patents
and other intellectual property material to its business, and the use thereof by
the Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

          SECTION 3.06.  Litigation and Environmental Matters.
                         ------------------------------------

          (a)  Litigation.  There are no actions, suits or proceedings by or
               ----------
before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of its Subsidiaries (i) as to which an adverse determination is reasonably
likely and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve this Agreement, the other Loan Documents or the Transactions.
<PAGE>

                                      -54-

          (b)  Environmental Matters.  Except with respect to any other matters
               ---------------------
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.

          (c)  Disclosed Matters.  Since the Effective Date, there has been no
               -----------------
change in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.  As of the Effective Date, the Borrower does not
believe that the Disclosed Matters individually or in the aggregate are
reasonably likely to have a Material Adverse Effect.

          SECTION 3.07.  Compliance with Laws and Agreements. Each of the
                         -----------------------------------
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.

          SECTION 3.08.  Investment and Holding Company Status. Neither the
                         -------------------------------------
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

          SECTION 3.09.  Taxes. Each of the Borrower and its Subsidiaries has
                         -----
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

          SECTION 3.10.  ERISA. No ERISA Event has occurred or is reasonably
                         -----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $55,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $55,000,000 the fair
market value of the assets of all such underfunded Plans.

          SECTION 3.11.  Disclosure. The Borrower and its Subsidiaries have
                         ----------
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which they are
<PAGE>

                                      -55-

subject, and all other matters known to them, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
None of the reports, financial statements, certificates or other information
furnished by or on behalf of the Obligors to the Administrative Agent or any
Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
                                            --------
projected financial information, the Obligors represent only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

          SECTION 3.12.  Regulations U and X. Neither the Borrower nor any of
                         -------------------
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock and no part of the
proceeds of any extension of credit hereunder will be used to buy or carry any
Margin Stock.

          SECTION 3.13.  Material Agreements and Liens.
                         -----------------------------

          (a)  Indebtedness.  Part A of Schedule 3.13 hereto is a complete and
               ------------
correct list, as of the Effective Date, of each credit agreement, loan
agreement, indenture, note purchase agreement, guarantee, letter of credit or
other arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee
by, the Borrower or any of its Subsidiaries (other than the Existing Credit
Agreement and the Senior Note Documents) the aggregate principal or face amount
of which equals or exceeds (or may equal or exceed) $100,000 and the aggregate
principal or face amount outstanding or that may become outstanding under each
such arrangement is correctly described in Part A of said Schedule 3.13.

          (b)  Liens.  Part B of Schedule 3.13 hereto is a complete and correct
               -----
list, as of the Effective Date, of each Lien securing Indebtedness of any Person
covering any property of the Borrower or any of its Subsidiaries, and the
aggregate Indebtedness secured (or which may be secured) by each such Lien and
the property covered by each such Lien is correctly described in Part B of said
Schedule 3.13.

          SECTION 3.14.  Subsidiaries, Etc.
                         -----------------

          (a)  Subsidiaries.  Set forth in Part A of Schedule 3.14 hereto is a
               ------------
complete and correct list, as of the Effective Date, of all of the Subsidiaries
of the Borrower, together with, for each Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests.  Except as disclosed in Part A of Schedule 3.14
hereto, (x) each of the Borrower and its Subsidiaries owns, free and clear of
Liens (other than Liens created pursuant to the Security Documents), and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule 3.14 hereto, (y) all of the issued
and outstanding capital stock of each such Person organized as a corporation is
validly issued, fully
<PAGE>

                                      -56-

paid and nonassessable and (z) there are no outstanding Equity Rights with
respect to such Person.

          (b)  Investments.  Set forth in Part B of Schedule 3.14 hereto is a
               -----------
complete and correct list, as of the Effective Date, of all Investments (other
than Investments disclosed in Part A of said Schedule 3.14 hereto) held by the
Borrower or any of its Subsidiaries in Person and, for each such Investment, (x)
the identity of the Person or Persons holding such Investment and (y) the nature
of such Investment.  Except as disclosed in Part B of Schedule 3.14 hereto, each
of the Borrower and its Subsidiaries owns, free and clear of all Liens (other
than Liens created pursuant to the Security Documents), all such Investments.

          SECTION 3.15.  Solvency. On and as of the Effective Date, immediately
                         --------
prior to and after consummation of the Transactions and after giving effect to
all Loans and other obligations and liabilities being incurred on such date in
connection therewith, and on the date of each subsequent Loan or other extension
of credit hereunder and after giving effect to application of the proceeds
thereof in accordance with the terms of the Loan Documents, the Borrower and its
Subsidiaries, taken as a whole, are, and each Obligor is, and will be Solvent.

          SECTION 3.16  Year 2000. Any reprogramming required to permit the
                        ---------
proper functioning, prior to, in and following the year 2000, of (i) the
Borrower's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which the Borrower's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, has been completed, such that any effect of the year 2000 will not
be a Material Adverse Effect. The cost to the Borrower of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) has not resulted in a Default or a Material
Adverse Effect.

                                  ARTICLE IV

                                  CONDITIONS

          SECTION 4.01.  Effective Date. This Agreement shall not become
                         --------------
effective until the date (the "Effective Date"), on which the Administrative
                               --------------
Agent shall notify the Borrower that each of the following conditions is
satisfied (or waived in accordance with Section 10.02) (provided that this
Agreement shall not become effective if the Effective Date does not occur before
December 15, 1999):

          (a)  Execution of Agreement.  The Administrative Agent (or Special
               ----------------------
     Counsel) shall have received from each Obligor, each Lender under the
     Existing Credit Agreement, and each Lender intended to be party to this
     Agreement that is not a party to the Existing Credit Agreement either (i) a
     counterpart of this Agreement signed on behalf of such party or (ii)
     written evidence satisfactory to the Administrative Agent (which may
     include telecopy transmission of a signed signature page of this Agreement)
     that such party has signed a counterpart of this Agreement.
<PAGE>

                                      -57-

          (b)  Corporate Documents.  The Administrative Agent shall have
               -------------------
     received such documents and certificates as the Administrative Agent or its
     counsel may reasonably request relating to the organization, existence and
     good standing of each Obligor, the authorization of the Transactions and
     any other legal matters relating to each Obligor, this Agreement, the other
     Loan Documents or the Transactions, all in form and substance satisfactory
     to the Administrative Agent and its counsel.

          (c)  Officer's Certificate.  The Administrative Agent shall have
               ---------------------
     received a certificate, dated the Effective Date and signed by the
     President, a Vice President or a Financial Officer of the Borrower,
     confirming compliance with the conditions set forth in paragraphs (a) and
     (b) of Section 4.02.

          (d)  Borrowing Base Certificate.  The Administrative Agent shall have
               --------------------------
     received a Borrowing Base Certificate not more than 3 days prior to the
     Effective Date.

          (e)  Opinion of Counsel to Obligors.  The Administrative Agent shall
               ------------------------------
     have received a favorable written opinion (addressed to the Administrative
     Agent and the Lenders and dated the Effective Date) of McGuire Woods Battle
     & Boothe LLP, counsel for the Obligors, substantially in the form of
     Exhibit D, and covering such other matters relating to the Obligors, this
     Agreement, the other Loan Documents or the Transactions as the Required
     Lenders shall reasonably request (and the Borrower hereby requests such
     counsel to deliver such opinion).

          (f)  Opinion of Special Counsel.  The Administrative Agent shall have
               --------------------------
     received a favorable written opinion (addressed to the Administrative Agent
     and the Lenders and dated the Effective Date) of Special Counsel
     substantially in the form of Exhibit E hereto (and the Administrative Agent
     hereby requests such counsel to deliver such opinion).

          (g)  Perfection Actions.  The Administrative Agent (or Special
               ------------------
     Counsel) shall have received evidence that duly completed and executed
     Uniform Commercial Code Financing Statements covering the personal property
     subject to the Liens created by the Security Agreement have been duly filed
     in all jurisdictions in which such filing is necessary or appropriate and
     that such filings are current and in full force and effect as of the
     Effective Date.

          (h)  Lien Searches.  The Administrative Agent (or Special Counsel)
               -------------
     shall have received a copy of the results of such Uniform Commercial Code,
     tax and judgment searches as may be requested by the Administrative Agent
     in each relevant jurisdiction with respect to the Borrower and its
     Subsidiaries and which searches reveal no Liens on any asset of the
     Borrower or its Subsidiaries except for (i) Liens permitted under this
     Agreement and (ii) Liens to be discharged on or prior to the Effective Date
     pursuant to documentation satisfactory to the Administrative Agent.

          (i)  Solvency Certificate.  The Administrative Agent (or Special
               --------------------
     Counsel) shall have received a certificate of the Borrower, to the effect
     that, as of the Effective Date (after giving effect to the Transactions),
     (a) the aggregate value of all properties of the Borrower and its
     Subsidiaries at their present fair saleable value (i.e., the amount which
<PAGE>

                                      -58-

     may be realized within a reasonable time, considered to be six months to
     one year, either through collection or sale at the regular market value,
     regular market value to mean the amount which could be obtained for the
     property in question within such period by a capable and diligent business
     person from an interested buyer who is willing to purchase under ordinary
     selling conditions), exceeds the aggregate amount of all the debts and
     liabilities (including contingent, subordinated, unmatured and unliquidated
     liabilities) of the Borrower and its Subsidiaries, (b) the Borrower and its
     Subsidiaries will not, on a consolidated basis, have an unreasonably small
     capital with which to conduct their business operations as contemplated to
     be conducted and (c) the Borrower and its Subsidiaries will have, on a
     consolidated basis, sufficient cash flow to enable them to pay their debts
     as they mature (satisfaction of items (a) through (c) of this paragraph (k)
     is herein referred to as being "Solvent").
                                     -------

          (j)  Fees, Etc.  The Administrative Agent, the Lenders and the
               ---------
     Arranger shall have received all fees and other amounts due and payable on
     or prior to the Effective Date, including, to the extent invoiced,
     reimbursement or payment of all out-of-pocket expenses required to be
     reimbursed or paid by the Obligors hereunder.

          (k)  Other Documents.  The Administrative Agent shall have received
               ---------------
     such other documents as the Administrative Agent or any Lender or Special
     Counsel may reasonably request.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

          SECTION 4.02.  Each Credit Event. The obligation of each Lender to
                         -----------------
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:

          (a)  Representations and Warranties.  The representations and
               ------------------------------
     warranties of the Obligors set forth in this Agreement and the other Loan
     Documents shall be true and correct on and as of the date of such Borrowing
     or the date of issuance, amendment, renewal or extension of such Letter of
     Credit, as applicable.

          (b)  Absence of Default.  At the time of and immediately after giving
               ------------------
     effect to such Borrowing or the issuance, amendment, renewal or extension
     of such Letter of Credit, as applicable, no Default shall have occurred and
     be continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section 4.02.
<PAGE>

                                      -59-

                                   ARTICLE V

                             AFFIRMATIVE COVENANTS

          Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:

          SECTION 5.01.  Financial Statements and Other Information. The
                         ------------------------------------------
Borrower will furnish to the Administrative Agent and each Lender:

          (a)  within 90 days after the end of each fiscal year of the Borrower,
     (i) its audited consolidated balance sheet and related statements of
     operations, stockholders' equity and cash flows as of the end of and for
     such year, setting forth in each case in comparative form the figures for
     the previous fiscal year, all reported on by Arthur Andersen LLP or other
     independent public accountants of recognized national standing (without a
     "going concern" or like modification, qualification or exception and
     without any modification, qualification or exception as to the scope of
     such audit) to the effect that such consolidated financial statements
     present fairly in all material respects the financial condition and results
     of operations of the Borrower and its consolidated Subsidiaries on a
     consolidated basis in accordance with GAAP consistently applied and (ii)
     its consolidating balance sheet and related statements of operations,
     stockholders' equity and cash flows as of the end of and for such year,
     setting forth in each case in comparative form the figures for the previous
     fiscal year, certified by one of its Financial Officers as presenting
     fairly in all material respects the financial condition and results of
     operations of the Borrower and its consolidated Subsidiaries on a
     consolidating basis in accordance with GAAP consistently applied;

          (b)  within 45 days after the end of each of the first three fiscal
     quarters of each fiscal year of the Borrower, (i) its consolidated balance
     sheet and related statements of operations, stockholders' equity and cash
     flows as of the end of and for such fiscal quarter and the then elapsed
     portion of the fiscal year, setting forth in each case in comparative form
     the figures for the corresponding period or periods of (or, in the case of
     the balance sheet, as of the end of) the previous fiscal year and (ii) its
     consolidating balance sheet and related statements of operations,
     stockholders' equity and cash flows as of the end of and for such fiscal
     quarter and the then elapsed portion of the fiscal year, setting forth in
     each case in comparative form the figures for the corresponding period or
     periods of (or, in the case of the balance sheet, as of the end of) the
     previous fiscal year, all certified by one of its Financial Officers as
     presenting fairly in all material respects the financial condition and
     results of operations of the Borrower and its consolidated Subsidiaries on
     a consolidated basis or consolidating basis, as the case may be, in
     accordance with GAAP consistently applied, subject to normal year-end audit
     adjustments and the absence of footnotes;
<PAGE>

                                      -60-

          (c)  concurrently with any delivery of financial statements under
     clause (a) or (b) above, a certificate of a Financial Officer of the
     Borrower (i) certifying as to whether a Default has occurred and, if a
     Default has occurred, specifying the details thereof and any action taken
     or proposed to be taken with respect thereto, (ii) setting forth reasonably
     detailed calculations of the Interest Coverage Ratio as at the last day of
     the fiscal quarter or fiscal year, as the case may be, in respect of which
     such financial statements are delivered, and demonstrating compliance with
     Section 6.12 and (iii) stating whether any change in GAAP or in the
     application thereof has occurred since the date of the audited financial
     statements referred to in Section 3.04 and, if any such change has
     occurred, specifying the effect of such change on the financial statements
     accompanying such certificate;

          (d)  concurrently with any delivery of financial statements under
     clause (a) above, a certificate of the accounting firm that reported on
     such financial statements stating whether they obtained knowledge during
     the course of their examination of such financial statements of any Default
     (which certificate may be limited to the extent required by accounting
     rules or guidelines);

          (e)  promptly after the same become publicly available, copies of all
     periodic and other reports, proxy statements and other materials filed by
     the Borrower or any Subsidiary with the Securities and Exchange Commission,
     or any Governmental Authority succeeding to any or all of the functions of
     said Commission, or with any national securities exchange, or distributed
     by the Borrower to its shareholders generally, as the case may be;

          (f)  as soon as available and in any event within 5 Business Days
     after the end of each monthly accounting period, (i) a Borrowing Base
     Certificate certifying as to the Borrowing Base as at the last day of such
     accounting period and (ii) a certificate of a Financial Officer in form and
     detail satisfactory to the Administrative Agent setting forth a
     determination of the aggregate Revolving Credit Exposure as at the last day
     of such monthly accounting period (taking into account the Dollar
     Equivalent of the aggregate amount of Revolving Credit Loans denominated in
     any Approved Foreign Currency);

          (g)  as soon as available after the end of each fiscal year of the
     Borrower, a report (prepared at the expense of the Borrower) of an
     independent collateral auditor (which may be, or be affiliated with, one of
     the Lenders) approved by the Administrative Agent with respect to the
     Receivables and Inventory components included in the Borrowing Base which
     report shall indicate that, based upon a review by such auditors of the
     Receivables (including, without limitation, verification with respect to
     the amount, aging, identity and credit of the respective account debtors
     and the billing practices of the Borrower and its Subsidiaries) and
     Inventory (including, without limitation, verification as to the value,
     location and respective types), the information set forth in the Borrowing
     Base Certificate then most recently received by the Administrative Agent
     hereunder is accurate and complete in all material respects and whether or
     not a Trigger Date (as such term is defined in Section 10.13 hereof) has
     occurred; and
<PAGE>

                                      -61-

          (h)  promptly following any request therefor, such other information
     regarding the operations, business affairs and financial condition of the
     Borrower or any Subsidiary, or compliance with the terms of this Agreement,
     as the Administrative Agent or any Lender may reasonably request.

          SECTION 5.02.  Notices of Material Events. The Borrower will furnish
                         --------------------------
to the Administrative Agent and each Lender prompt written notice of the
following:

          (a)  the occurrence of any Default;

          (b)  the filing or commencement of any action, suit or proceeding by
     or before any arbitrator or Governmental Authority against or affecting the
     Borrower or any Affiliate thereof that, if adversely determined, could
     reasonably be expected to result in a Material Adverse Effect;

          (c)  the occurrence of any ERISA Event that, alone or together with
     any other ERISA Events that have occurred, could reasonably be expected to
     result in liability of the Borrower and its Subsidiaries in an aggregate
     amount exceeding $250,000; and

          (d)  any other development that results in, or could reasonably be
     expected to result in, a Material Adverse Effect.

Each notice delivered under this Section 5.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

          SECTION 5.03.  Existence; Conduct of Business. The Borrower will, and
                         ------------------------------
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
                                --------
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.

          SECTION 5.04.  Payment of Obligations. The Borrower will, and will
                         ----------------------
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

          SECTION 5.05.  Maintenance of Properties; Insurance. The Borrower
                         ------------------------------------
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
<PAGE>

                                      -62-

          SECTION 5.06.  Books and Records; Inspection Rights. The Borrower
                         ------------------------------------
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.

          SECTION 5.07.  Compliance with Laws. The Borrower will, and will cause
                         --------------------
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority, including all Environmental Laws, and with all
other material obligations, applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

          SECTION 5.08.  Use of Proceeds and Letters of Credit.
                         -------------------------------------

          (a)  Use of Proceeds.  The proceeds of the Loans hereunder will be
               ---------------
used only for working capital and other general corporate purposes of the
Borrower and its Subsidiaries.  No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations U and X.

          (b)  Letters of Credit.  Letters of Credit will be issued only to
               -----------------
support obligations of the Borrower and its Subsidiaries.

          SECTION 5.09.  Additional Subsidiary Guarantors. The Borrower will
                         --------------------------------
take such action, and will cause each of its Subsidiaries to take such action,
from time to time as shall be necessary to ensure that each Subsidiary the
inventory or receivables of which are included in the calculation of the
Borrowing Base is a Subsidiary Guarantor and, thereby, an "Obligor" hereunder
and under the Security Agreement pursuant to documentation satisfactory to the
Administrative Agent in form and substance. In addition, the Borrower may cause
any of its other Subsidiaries to become a Subsidiary Guarantor and, thereby, an
"Obligor" hereunder and under the Security Agreement pursuant to documentation
satisfactory to the Administrative Agent in form and substance. Each such new
Subsidiary Guarantor shall deliver such proof of corporate action, incumbency of
officers, opinions of counsel and other documents as is consistent with those
delivered by each other Obligor pursuant to Section 4.01 or as any Lender or the
Administrative Agent shall have reasonably requested.

                                  ARTICLE VI

                              NEGATIVE COVENANTS

          Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
<PAGE>

                                      -63-

          SECTION 6.01.  Indebtedness. The Borrower will not, and will not
                         ------------
permit any Subsidiary to, create, incur or assume any Indebtedness, except:

          (a)  Indebtedness created hereunder;

          (b)  Pari Passu Debt;

          (c)  any extensions, renewals or replacements of any Indebtedness
     existing on the date hereof and set forth in Schedule 6.01, provided that
     the aggregate principal amount of such Indebtedness is not thereby
     increased;

          (d)  Indebtedness of the Borrower to any Subsidiary and of any
     Subsidiary to the Borrower or any other Subsidiary;

          (e)  other Indebtedness in an aggregate principal amount not exceeding
     $20,000,000 created, incurred or assumed in any fiscal year of the
     Borrower; and

          (f)  other Indebtedness provided that, on the date (the "Incurrence
                                  --------                         ----------
     Date") such Indebtedness is created, incurred or assumed (as the case may
     ----
     be), the Borrower furnishes to the Administrative Agent reasonable
     projections demonstrating in reasonable detail that the Borrower will be in
     compliance with Section 6.12(e) on the last day of each of the next
     succeeding four fiscal quarters of the Borrower that end after the
     Incurrence Date after giving effect to such creation, incurrence or
     assumption, together with a certificate of a Financial Officer to the
     effect that such projections are based upon reasonable assumptions and
     reflect the Borrower's best estimate as to the matters covered thereby.

For purposes of the foregoing paragraphs (e) and (f), the Acquisition of any
Person shall be deemed to constitute the assumption of the Indebtedness of such
Person by a Subsidiary of the Borrower at the time of the consummation of such
Acquisition.

          SECTION 6.02.  Liens. The Borrower will not, and will not permit any
                         -----
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

          (a)  Permitted Encumbrances;

          (b)  Liens created by the Senior Note Documents as in effect on the
     date hereof; provided that there shall be no Lien securing any obligations
                  --------
     under the Senior Note Documents at any time after the Security Termination
     Date;

          (c)  any Lien on any property or asset of the Borrower or any
     Subsidiary existing on the date hereof and set forth in Schedule 6.02
     (other than Liens created by the Senior Note Documents); provided that (i)
                                                              --------
     such Lien shall not apply to any other property or asset of the Borrower or
     any Subsidiary and (ii) such Lien shall secure only those obligations which
     it secures on the date hereof;
<PAGE>

                                      -64-

          (d)  any Lien existing on any property or asset prior to the
     acquisition thereof by the Borrower or any Subsidiary or existing on any
     property or asset of any Person that becomes a Subsidiary after the date
     hereof prior to the time such Person becomes a Subsidiary; provided that
                                                                --------
     (i) such Lien is not created in contemplation of or in connection with such
     acquisition or such Person becoming a Subsidiary, as the case may be, (ii)
     such Lien shall not apply to any other property or assets of the Borrower
     or any Subsidiary and (iii) such Lien shall secure only those obligations
     which it secures on the date of such acquisition or the date such Person
     becomes a Subsidiary, as the case may be;

          (e)  Liens on fixed or capital assets acquired, constructed or
     improved by the Borrower or any Subsidiary; provided that (i) such security
                                                 --------
     interests secure Indebtedness incurred to finance such acquisition,
     construction or improvement, (ii) such security interests and the
     Indebtedness secured thereby are incurred prior to or within 90 days after
     such acquisition or the completion of such construction or improvement,
     (iii) the Indebtedness secured thereby does not exceed 80% of the cost of
     acquiring, constructing or improving such fixed or capital assets and (iv)
     such security interests shall not apply to any other property or assets of
     the Borrower or any Subsidiary;

          (f)  the Lien created by the Security Agreement; provided that there
                                                           --------
     shall be no Lien securing any Pari Passu Debt at any time after the
     Security Termination Date;

          (g)  any extensions, renewals or replacements of any of the Liens
     permitted by the foregoing clauses (a) through (f) effected in connection
     with any extension, renewal or replacement of the Indebtedness secured
     thereby; provided that (i) the aggregate principal amount of such
              --------
     Indebtedness is not thereby increased, (ii) such Lien shall not be extended
     to cover any additional property and (iii) there shall be no Lien securing
     any extension, renewal or replacement of the Pari Passu Debt or any
     obligations under the Senior Note Documents at any time after the Security
     Termination Date; and

          (h)  other Liens that (whether before or after the Security
     Termination Date) do not cover any Collateral (as defined in the Security
     Agreement).

Notwithstanding anything contained herein to the contrary, the aggregate amount
of obligations of the Borrower and its Subsidiaries secured by Liens permitted
by any of clauses (c), (d), (e), (g) (to the extent extending, renewing or
replacing any of the Liens permitted by any of clauses (c), (d) and (e)) and (h)
shall not exceed 15% of Consolidated Tangible Net Worth at any time on or after
the Security Termination Date.

          SECTION 6.03.  Fundamental Changes.
                         -------------------

          (a)  Mergers, Sales of Assets, Etc.  The Borrower will not, and will
               -----------------------------
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets, or all or substantially
all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge
<PAGE>

                                      -65-

into the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Subsidiary may merge into any Subsidiary in a transaction
in which the surviving entity is a Subsidiary, provided that if any such
                                               --------
transaction shall be between a Subsidiary Guarantor and a Subsidiary not a
Subsidiary Guarantor, and such Subsidiary Guarantor is not the continuing or
surviving corporation, then the continuing or surviving corporation shall have
assumed all of the obligations of such Subsidiary Guarantor hereunder and under
the other Loan Documents pursuant to documentation satisfactory to the
Administrative Agent in form and substance, (iii) any Subsidiary may sell,
transfer, lease or otherwise dispose of its assets to the Borrower or to another
Subsidiary, provided that if any such transaction shall be between a Subsidiary
Guarantor and a Subsidiary not a Subsidiary Guarantor, and if such Subsidiary
Guarantor is not the continuing or surviving corporation, then the continuing or
surviving corporation shall have assumed all of the obligations of such
Subsidiary Guarantor hereunder and under the other Loan Documents pursuant to
documentation satisfactory to the Administrative Agent in form and substance and
(iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders; provided that any
                                                               --------
such merger that would otherwise be permitted by this Section 6.03 involving a
Person that is not a wholly owned Subsidiary immediately prior to such merger
shall not be permitted unless also permitted by Section 6.04.

          (b)   Joint Ventures.  The Borrower will not, and will not permit any
                --------------
of its Subsidiaries to invest in any Joint Venture, consummate any Acquisition
or otherwise acquire any business, or the related assets, of any other Person
(whether by way of purchase of assets or stock, by merger or consolidation or
otherwise), unless immediately prior to such acquisition and after giving effect
thereto, no Default shall have occurred and be continuing, and:

          (i)   such acquisition is an Acquisition and such Acquisition (if by
     purchase of assets, merger or consolidation) is effected in such manner
     that the acquired business, and the related assets, are owned either by the
     Borrower or a Subsidiary and, if effected by merger or consolidation
     involving the Borrower, the Borrower is the continuing or surviving entity
     and, if effected by merger or consolidation involving a Subsidiary, the
     continuing or surviving entity is a Subsidiary; or

          (ii)  such acquisition is an Acquisition and such Acquisition (if by
     purchase of stock) is effected in such manner so that the acquired entity
     becomes a Subsidiary; or

          (iii) such transaction is an Acquisition or a Joint Venture and after
     giving effect to such Acquisition or Joint Venture the Borrower is in
     compliance with Section 6.12 (the determination of such compliance to be
     calculated on a pro forma basis, as at the end of and for the period of
     four consecutive fiscal quarters most recently ended prior to the date of
     such Acquisition or Joint Venture for which financial statements of the
     Borrower and its Subsidiaries are available, under the assumption that such
     Acquisition or Joint Venture shall have occurred, and any Indebtedness in
     connection therewith shall have been incurred, at the beginning of the
     applicable period, and under the assumption that interest for such period
     had been equal to the actual weighted average interest rate in effect for
     the Loans hereunder on the date of such Acquisition or Joint Venture)
<PAGE>

                                      -66-

     and, in the event that the aggregate amount of expenditures in respect of
     such Acquisition or Joint Venture and of all prior Acquisitions and Joint
     Ventures made during a single fiscal year and not covered by a certificate
     delivered under this subclause (iii) exceeds $50,000,000, the Borrower
     shall have delivered to the Administrative Agent a certificate of a
     Financial Officer showing calculations in reasonable detail to demonstrate
     compliance with this subclause (iii).

          (c)  Lines of Business.  The Borrower will not, and will not permit
               -----------------
any of its Subsidiaries to, engage to any material extent in any business other
than businesses of the type conducted by the Borrower and its Subsidiaries on
the Effective Date and businesses reasonably related thereto.

          SECTION 6.04.  Investments, Loans, Advances, Guarantees and
                         --------------------------------------------
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
------------
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:

          (a)  Permitted Investments;

          (b)  Investments by the Borrower existing on the date hereof in the
     capital stock of its Subsidiaries and Investments by the Borrower existing
     on the date hereof described in Part B of Schedule 3.14;

          (c)  Investments made by the Borrower in any Subsidiary and made by
     any Subsidiary in the Borrower or any other Subsidiary;

          (d)  Guarantees constituting Indebtedness permitted by Section 6.01;

          (e)  Investments in an aggregate amount not exceeding $10,000,000 at
     any one time outstanding in a cold storage warehouse and distribution
     center in Sioux Falls, South Dakota constituting a joint venture between
     Freezer Services Inc., the Borrower and John Morrell & Co.;

          (f)  other Investments not exceeding $5,000,000 in the aggregate
     amount outstanding at any time; and

          (g)  Investments constituting Acquisitions or Joint Ventures permitted
     by Section 6.03(b) made by the Borrower or any of its Subsidiaries in any
     Person (other than a Subsidiary) principally engaged in a business in which
     the Borrower and its Subsidiaries are permitted by Section 6.03(c) to be
     engaged.

          SECTION 6.05.  Hedging Agreements. The Borrower will not, and will not
                         ------------------
permit any of its Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which
<PAGE>

                                      -67-

the Borrower or any Subsidiary is exposed in the conduct of its business or the
management of its liabilities.

          SECTION 6.06.  Restricted Payments. The Borrower will not, and will
                         -------------------
not permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except that (a) the Borrower may
declare and pay dividends with respect to its capital stock payable solely in
additional shares of its common stock, (b) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock and (c) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrower and its
Subsidiaries.

          SECTION 6.07.  Transactions with Affiliates. The Borrower will not,
                         ----------------------------
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Borrower and its Subsidiaries not
involving any other Affiliate and (c) any Restricted Payment permitted by
Section 6.06.

          SECTION 6.08.  Restrictive Agreements. The Borrower will not, and will
                         ----------------------
not permit any of its Subsidiaries to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Borrower or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of
the Borrower or any other Subsidiary; provided that (i) the foregoing shall not
                                      --------
apply to restrictions and conditions imposed by law or by this Agreement or any
of the other Loan Documents, (ii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 6.08 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement or any of the other Loan Documents if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness, (v) clause (a) of the foregoing shall not apply to customary
provisions in leases restricting the assignment thereof, (vi) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
under which the Indebtedness governed by the Senior Note Documents is
refinanced, provided that such restrictions or conditions are not materially
more restrictive than those contained in the Senior Note Documents on the date
hereof (and, if such agreement does not provide that the Indebtedness created
thereunder will be secured by Liens on property or assets of the Borrower or any
Subsidiary, such agreement may contain restrictions or conditions limiting Liens
on property or assets of the Borrower or any Subsidiary which are not the
subject of Liens granted
<PAGE>

                                      -68-

under the Security Agreement and such restrictions or conditions shall not be
deemed more onerous than those contained in the Senior Note Documents on the
date hereof) and (vii) clause (a) of the foregoing shall not apply to any
requirement that obligations of the Borrower or its Subsidiaries, as the case
may be, that are pari passu or subordinated in right of payment to the Senior
                 ---- -----
Subordinated Notes or the guaranties by Subsidiaries of the Borrower in respect
thereof, as the case may be, may not be secured unless the Senior Subordinated
Notes and/or such guaranties are at least equally and ratably secured.

          SECTION 6.09.  Senior Note Documents. Promptly following the execution
                         ---------------------
thereof, the Borrower will supply each Lender with a copy of any modification,
supplement or waiver to a Senior Note Document.

          SECTION 6.10.  Limitation on Sale and Leaseback Transactions. The
                         ---------------------------------------------
Borrower will not, and will not permit any of its Subsidiaries to, enter into,
renew or extend any transaction or series of related transactions pursuant to
which the Borrower or such Subsidiary sells or transfers any property in
connection with the leasing, or the release against installment payments, or as
part of an arrangement involving the leasing or resale against installment
payments, of such property to the seller or transferor.

          SECTION 6.11.  Fiscal Periods. If the Borrower changes the manner of
                         --------------
determining the last day of its fiscal year or the last days of the first three
fiscal quarters in each of its fiscal years, the parties hereto shall negotiate
in good faith to agree to modify any financial calculations and determinations
hereunder to reflect their original intent in light of such changes, and if they
fail so to agree all such financial calculations determinations hereunder shall
continue to be made as if such change had not occurred.

          SECTION 6.12.  Financial Covenants.
                         -------------------

          (a)  Consolidated Current Ratio.  The Borrower will not permit the
               --------------------------
Consolidated Current Ratio to be less than 1.05 to 1 at any time.

          (b)  Consolidated Working Capital.  The Borrower will not permit
               ----------------------------
Consolidated Working Capital to be less than $35,000,000 at any time.

          (c)  Consolidated Leverage Ratio.  The Borrower will not permit the
               ---------------------------
ratio of Consolidated Total Funded Debt to Consolidated EBITDA (for the four
prior fiscal quarters) on any date to be more than 4.00 to 1; and the Borrower
will not permit the ratio of Senior Consolidated Funded Debt to Consolidated
EBITDA on any date to be more than 3.20 to 1.

          (d)  Consolidated Tangible Net Worth.  The Borrower will not permit
               -------------------------------
Consolidated Tangible Net Worth on any date (the "Determination Date") to be
                                                  ------------------
less than the sum of (i) $450,000,000 plus (ii) 50% of the aggregate amount of
                                      ----
Consolidated Net Income for each quarter that ends after the Effective Date and
on or before the Determination Date in respect of which Consolidated Net Income
is greater than zero plus (iii) 50% of the aggregate amount of increases in
                     ----
Consolidated Tangible Net Worth after the Effective Date and on or before the
Determination Date resulting from the issuance by it of capital stock as
consideration in Acquisitions made by it and its Subsidiaries.
<PAGE>

                                      -69-

          (e)  Consolidated Interest Coverage Ratio.  The Borrower will not
               ------------------------------------
permit the ratio of Consolidated EBIT to Consolidated Interest Expense for any
period of four consecutive fiscal quarters of the Borrower to be less than 2.50
to 1.

          SECTION 6.13.  Senior Subordinated Notes.  If any Default then exists
                         -------------------------
or would result therefrom, the Borrower will not, and will not permit any of its
Subsidiaries to, purchase, redeem, retire or otherwise acquire for value, or set
apart any money for a sinking, defeasance or other analogous fund for the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, the Senior Subordinated Notes, except (subject to the terms
of subordination thereof) for regularly scheduled payments of principal and
interest in respect thereof required pursuant to the terms) hereof. The Borrower
shall not, and shall not permit any of its Subsidiaries to, consent to any
modification, supplement or waiver of any of the provisions of any agreement,
instrument or other document evidencing or relating to the Senior Subordinated
Notes without the prior consent of the Administrative Agent (with the approval
of the Required Lenders) if such modification, supplement or waiver would be
adverse in any material respect to the interests of the Borrower, any of its
Subsidiaries or any of the Lenders.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

          If any of the following events ("Events of Default") shall occur:
                                           -----------------

          (a)  the Borrower shall fail to pay any principal of any Loan or any
     reimbursement obligation in respect of any LC Disbursement when and as the
     same shall become due and payable, whether at the due date thereof or at a
     date fixed for prepayment thereof or otherwise;

          (b)  the Borrower shall fail to pay any interest on any Loan or any
     fee or any other amount (other than an amount referred to in clause (a) of
     this Article) payable under this Agreement or any other Loan Document, when
     and as the same shall become due and payable, and such failure shall
     continue unremedied for a period of three or more Business Days;

          (c)  any representation or warranty made or deemed made by or on
     behalf of any Obligor in or in connection with this Agreement or any other
     Loan Document or any amendment or modification hereof or thereof or waiver
     hereunder or thereunder, or in any report, certificate, financial statement
     or other document furnished pursuant to or in connection with this
     Agreement or any other Loan Document or any amendment or modification
     hereof or thereof or waiver hereunder or thereunder, shall prove to have
     been incorrect in any material respect when made or deemed made;

          (d)  the Borrower shall fail to observe or perform any covenant,
     condition or agreement contained in Section 5.02, 5.03 (with respect to the
     existence of the Borrower or any Subsidiary) or 5.08 or in Article VI;
<PAGE>

                                      -70-

          (e)  any Obligor shall fail to observe or perform any covenant,
     condition or agreement contained in this Agreement or any other Loan
     Document (other than those specified in clause (a), (b) or (d) of this
     Article), and such failure shall continue unremedied for a period of 30
     days after notice thereof from the Administrative Agent to the Borrower
     (which notice will be given at the request of any Lender);

          (f)  the Borrower or any Subsidiary shall fail to make any payment
     (whether of principal or interest and regardless of amount) in respect of
     any Material Indebtedness, when and as the same shall become due and
     payable;

          (g)  any event or condition occurs that results in any Material
     Indebtedness becoming due prior to its scheduled maturity or that enables
     or permits (with or without the giving of notice, the lapse of time or
     both) the holder or holders of any Material Indebtedness or any trustee or
     agent on its or their behalf to cause any Material Indebtedness to become
     due, or to require the prepayment, repurchase, redemption or defeasance
     thereof, prior to its scheduled maturity; provided that this clause (g)
                                               --------
     shall not apply to secured Indebtedness that becomes due as a result of the
     voluntary sale or transfer of the property or assets securing such
     Indebtedness;

          (h)  an involuntary proceeding shall be commenced or an involuntary
     petition shall be filed seeking (i) liquidation, reorganization or other
     relief in respect of the Borrower or any Subsidiary or its debts, or of a
     substantial part of its assets, under any Federal, state or foreign
     bankruptcy, insolvency, receivership or similar law now or hereafter in
     effect or (ii) the appointment of a receiver, trustee, custodian,
     sequestrator, conservator or similar official for the Borrower or any
     Subsidiary or for a substantial part of its assets, and, in any such case,
     such proceeding or petition shall continue undismissed for 60 days or an
     order or decree approving or ordering any of the foregoing shall be
     entered;

          (i)  the Borrower or any Subsidiary shall (i) voluntarily commence any
     proceeding or file any petition seeking liquidation, reorganization or
     other relief under any Federal, state or foreign bankruptcy, insolvency,
     receivership or similar law now or hereafter in effect, (ii) consent to the
     institution of, or fail to contest in a timely and appropriate manner, any
     proceeding or petition described in clause (h) of this Article, (iii) apply
     for or consent to the appointment of a receiver, trustee, custodian,
     sequestrator, conservator or similar official for the Borrower or any
     Subsidiary or for a substantial part of its assets, (iv) file an answer
     admitting the material allegations of a petition filed against it in any
     such proceeding, (v) make a general assignment for the benefit of creditors
     or (vi) take any action for the purpose of effecting any of the foregoing;

          (j)  the Borrower or any Subsidiary shall become unable, admit in
     writing or fail generally to pay its debts as they become due;

          (k)  one or more judgments for the payment of money in an aggregate
     amount in excess of $5,000,000 shall be rendered against the Borrower, any
     Subsidiary or any combination thereof and the same shall remain
     undischarged for a period of 30 consecutive days during which execution
     shall not be effectively stayed, or any action
<PAGE>

                                      -71-

     shall be legally taken by a judgment creditor to attach or levy upon any
     assets of the Borrower or any Subsidiary to enforce any such judgment;

          (l)  the Borrower or any Subsidiary receives any notice, notification,
     demand, request for information, citation, summons or order or there has
     been filed any complaint or any penalty has been assessed or an
     investigation or review is pending or threatened by any governmental or
     other entity, in each case with respect to any alleged failure by the
     Borrower or any of its Subsidiaries to have any environmental, health or
     safety permit, license or other authorization required under any
     Environmental Law in connection with the conduct of the business of the
     Borrower or any of its Subsidiaries or with respect to any generation,
     treatment, storage, recycling, transportation, discharge or disposal, or
     any release of any Hazardous Materials generated by the Borrower or any of
     its Subsidiaries, in each case which could reasonably be expected to result
     in a Material Adverse Effect;

          (m)  an ERISA Event shall have occurred that, in the opinion of the
     Required Lenders, when taken together with all other ERISA Events that have
     occurred, could reasonably be expected to result in liability of the
     Borrower and its Subsidiaries in an aggregate amount exceeding (i)
     $2,000,000 in any year or (ii) $10,000,000 for all periods;

          (n)  any of the following shall occur: (i) subject to Section 10.13,
     the Lien created by any Security Document shall at any time cease to
     constitute a valid and perfected Lien on the collateral intended to be
     covered thereby before the Security Termination Date; (ii) subject to
     Section 10.13, except for expiration in accordance with its terms, any
     Security Document shall for whatever reason be terminated, or shall cease
     to be in full force and effect before the Security Termination Date; or
     (iii) subject to Section 10.13, the actual or asserted invalidity of any
     Security Document or of any guarantee under Article VIII hereof or the
     validity of any Security Document or of any guarantee under Article VIII
     hereof or the validity of any subordination provision contained in Article
     VIII hereof shall be contested by any party before (in the case of any
     Security Document) the Security Termination Date; or

          (o)  a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with
<PAGE>

                                      -72-

accrued interest thereon and all fees and other obligations of the Obligors
accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Obligors.

                                 ARTICLE VIII

                                   GUARANTEE

          SECTION 8.01  The Guarantee. The Subsidiary Guarantors hereby jointly
                        -------------
and severally guarantee to each Lender and the Administrative Agent and their
respective successors and assigns the prompt payment in full when due (whether
at stated maturity, by acceleration or otherwise) of the principal of and
interest on the Loans (and, in the case of Letters of Credit, LC Disbursements)
made by the Lenders to the Borrower and all other amounts from time to time
owing to the Lenders or the Administrative Agent by the Borrower under this
Agreement and by any Obligor under any of the other Loan Documents, and all
obligations of the Borrower to any Lender (or any affiliate of any Lender) in
respect of any Hedging Agreement, in each case in the Currency thereof and
otherwise strictly in accordance with the terms thereof (such obligations being
herein collectively called the "Guaranteed Obligations"). The Subsidiary
                                ----------------------
Guarantors hereby further jointly and severally agree that if the Borrower shall
fail to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any of the Guaranteed Obligations, the Subsidiary Guarantors will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.

          SECTION 8.02  Obligations Unconditional. The obligations of the
                        -------------------------
Subsidiary Guarantors under Section 8.01 hereof are absolute and unconditional,
joint and several, irrespective of the value, genuineness, validity, regularity
or enforceability of the obligations of the Borrower under this Agreement or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 8.02 that the obligations of the
Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and
several, under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Subsidiary Guarantors hereunder
which shall remain absolute and unconditional as described above:

          (i)  at any time or from time to time, without notice to the
     Subsidiary Guarantors, the time for any performance of or compliance with
     any of the Guaranteed Obligations shall be extended, or such performance or
     compliance shall be waived;

          (ii)  any of the acts mentioned in any of the provisions of this
     Agreement or any other agreement or instrument referred to herein or
     therein shall be done or omitted;
<PAGE>

                                      -73-

          (iii) the maturity of any of the Guaranteed Obligations shall be
     accelerated, or any of the Guaranteed Obligations shall be modified,
     supplemented or amended in any respect, or any right under this Agreement
     or any other agreement or instrument referred to herein or therein shall be
     waived or any other guarantee of any of the Guaranteed Obligations or any
     security therefor shall be released or exchanged in whole or in part or
     otherwise dealt with; or

          (iv)  any lien or security interest granted to, or in favor of, the
     Administrative Agent or any Lender or Lenders as security for any of the
     Guaranteed Obligations shall fail to be perfected.

The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed
against the Borrower under this Agreement or any other agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.

          SECTION 8.03  Reinstatement. The obligations of the Subsidiary
                        -------------
Guarantors under this Article VIII shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of the Borrower in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise and the Subsidiary
Guarantors jointly and severally agree that they will indemnify the
Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the
Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.

          SECTION 8.04  Subrogation. The Subsidiary Guarantors hereby jointly
                        -----------
and severally agree that until the payment and satisfaction in full of all
Guaranteed Obligations and the expiration and termination of the Commitments and
Letters of Credit under this Agreement they shall not exercise any right or
remedy arising by reason of any performance by them of their guarantee in
Section 8.01 hereof, whether by subrogation or otherwise, against the Borrower
or any other guarantor of any of the Guaranteed Obligations or any security for
any of the Guaranteed Obligations.

          SECTION 8.05  Remedies. The Subsidiary Guarantors jointly and
                        --------
severally agree that, as between the Subsidiary Guarantors and the Lenders, the
obligations of the Borrower under this Agreement may be declared to be forthwith
due and payable as provided in Article VII hereof (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Article VII) for purposes of Section 8.01 notwithstanding any stay, injunction
or other prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against the Borrower and that, in the
event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the Borrower) shall forthwith become due and payable by the Subsidiary
Guarantors for purposes of said Section 8.01.
<PAGE>

                                      -74-

          SECTION 8.06  Instrument for the Payment of Money. Each Subsidiary
                        -----------------------------------
Guarantor hereby acknowledges that the guarantee in this Article VIII
constitutes an instrument for the payment of money, and consents and agrees that
any Lender or the Administrative Agent, at its sole option, in the event of a
dispute by such Subsidiary Guarantor in the payment of any moneys due hereunder,
shall have the right to bring motion-action under New York CPLR Section 3213.

          SECTION 8.07  Continuing Guarantee. The guarantee in this Article VIII
                        --------------------
is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.

          SECTION 8.08  Rights of Contribution. The Subsidiary Guarantors hereby
                        ----------------------
agree, as between themselves, that if any Subsidiary Guarantor shall become an
Excess Funding Guarantor (as defined below) by reason of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
next sentence), pay to such Excess Funding Guarantor an amount equal to such
Subsidiary Guarantor's Pro Rata Share (as defined below and determined, for this
purpose, without reference to the Properties, debts and liabilities of such
Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of
such Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor to
any Excess Funding Guarantor under this Section 8.08 shall be subordinate and
subject in right of payment to the prior payment in full of the obligations of
such Subsidiary Guarantor under the other provisions of this Article VIII and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations.

          For purposes of this Section 8.08, (i) "Excess Funding Guarantor"
                                                  ------------------------
means, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has
paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations,
(ii) "Excess Payment" means, in respect of any Guaranteed Obligations, the
      --------------
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
                                       --------------
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock of any other Subsidiary Guarantor)
exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Subsidiary Guarantor hereunder and any
obligations of any other Subsidiary Guarantor that have been Guaranteed by such
Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable
value of all properties of all of the Subsidiary Guarantors exceeds the amount
of all the debts and liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities, but excluding the obligations of the Borrower and
the Subsidiary Guarantors hereunder and under the other Loan Documents) of all
of the Subsidiary Guarantors, determined (A) with respect to any Subsidiary
Guarantor that is a party hereto on the Effective Date, as of the Effective
Date, and (B) with respect to any other Subsidiary Guarantor, as of the date
such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.

          SECTION 8.09  General Limitation on Guarantee Obligations. In any
                        -------------------------------------------
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency,
<PAGE>

                                      -75-

reorganization or other law affecting the rights of creditors generally, if the
obligations of any Subsidiary Guarantor under Section 8.01 would otherwise,
taking into account the provisions of Section 8.08, be held or determined to be
void, invalid or unenforceable, or subordinated to the claims of any other
creditors, on account of the amount of its liability under said Section 8.01,
then, notwithstanding any other provision hereof to the contrary, the amount of
such liability shall, without any further action by such Subsidiary Guarantor,
any Lender, the Administrative Agent or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

                                  ARTICLE IX

                           THE ADMINISTRATIVE AGENT

          Each of the Lenders and the Issuing Banks hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

          Each of the Lenders and the Issuing Banks hereby irrevocably appoints
the Collateral Agent as its collateral agent under the Security Agreement and
authorizes the Collateral Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Collateral Agent by the terms
hereof or of the Security Agreement, together with such actions and powers as
are reasonably incidental thereto.

          The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

          The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein.  Without limiting the generality of the
foregoing (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
<PAGE>

                                      -76-

wilful misconduct.  The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

          The Administrative Agent shall take such action (subject to Section
10.02(b) hereof and subject to the right of the Administrative Agent to receive
further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.03(c) hereof against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take
such action) with respect to the notice of a Default referred to in the
preceding paragraph as shall be directed by the Required Lenders, provided that,
                                                                  --------
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such notice of Default as it
shall deem advisable in the best interest of the Lenders except to the extent
that this Agreement expressly requires that such action be taken, or not be
taken, only with the consent or upon the authorization of the Required Lenders
or all of the Lenders.

          The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon.  The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

          The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties.  The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

          Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders
<PAGE>

                                      -77-

shall have the right, in consultation with the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

          Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.

          The Arranger identified on the cover page of this Agreement shall have
no duties or responsibilities hereunder.  The Co-Agent identified on the cover
page of this Agreement shall have no duties or responsibilities hereunder other
than as a Lender and as an Issuing Bank hereunder.

                                   ARTICLE X

                                 MISCELLANEOUS

          SECTION 10.01.  Notices. Except in the case of notices and other
                          -------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

          (a)  if to the Borrower, to it at Smithfield Foods, Inc. at 200
     Commerce Street, Smithfield, VA  23430, Attention:  Mr. C. Larry Pope
     (Telecopy No. 757-365-3023) and Michael H. Cole (Telecopy No. 757-365-
     3023);

          (b)  if to any Subsidiary Guarantor, at the address for notices to the
     Borrower as provided herein;
<PAGE>

                                      -78-

          (c)  if to the Administrative Agent or the Collateral Agent, to The
     Chase Manhattan Bank, Agent Bank Services Group, 1 Chase Manhattan Plaza,
     New York, New York  10017, Attention of Deidre Wall (Telecopy No. 212-552-
     7391), and, if such notice or other communication relates to borrowings of,
     or payments or prepayments of, or the duration of Interest Periods for,
     Loans denominated in a Foreign Currency, also to The Chase Manhattan Bank,
     4 Thomas More Street, London, E1 94T, England, Attention: Agency Loans
     Department (Telecopy No. 44-171-777-2360; Telephone No. 44-171-777-2353),
     in each case with a copy to The Chase Manhattan Bank, 270 Park Avenue, New
     York, New York 10017, Attention of Gary L. Spevack (Telecopy No. 212-270-
     8963);

          (d)  if to Chase in its capacity as Issuing Bank, to it at 1 Chase
     Manhattan Plaza, New York, New York 10017,  Attention of Paul W. Robinson,
     Supervisor L/C (Telecopy No. 212-638-8200);

          (e)  if to the Swingline Lender, to The Chase Manhattan Bank, Agent
     Bank Services Group, 1 Chase Manhattan Plaza, New York, New York 10017,
     Attention of Deidre Wall (Telecopy No. 212-552-7391); and

          (f)  if to any other Lender, to it at its address (or telecopy number)
     set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

          SECTION 10.02.  Waivers; Amendments.
                          -------------------

          (a)  Waivers.  No failure or delay by the Administrative Agent, any
               -------
Issuing Bank or any Lender in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.  The rights and remedies of the
Administrative Agent, the Issuing Banks and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Obligor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 10.02, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.  Without limiting the generality of the foregoing, the making of a
Loan or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or any
Issuing Bank may have had notice or knowledge of such Default at the time.

          (b)  Amendments of Agreement.  Neither this Agreement nor any
               -----------------------
provision hereof, nor the Intercreditor Agreements nor any provision thereof,
may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Obligors
<PAGE>

                                      -79-

and the Required Lenders or by the Obligors and the Administrative Agent with
the consent of the Required Lenders; provided that no such agreement shall (i)
                                     --------
increase the Commitment (or either Sub-Commitment) of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.17 in a manner that would
alter the pro rata treatment of Lenders required thereby, without the written
consent of each Lender, (v) change the definition of "Approved Foreign
Currency", "Dollar Equivalent", "Foreign Currency" or "Foreign Currency
Equivalent", or any provision affecting the calculation of an amount payable in
an Approved Foreign Currency, without the written consent of each Multicurrency
Lender, (vi) change any of the provisions of this Section 10.02 or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender, (vii) change the reference to 75% in the
definition of "Borrowing Base" to a higher percentage without the written
consent of each Lender; (viii) release all or substantially all of the
Subsidiary Guarantors from their obligations in respect of their Guarantee
hereunder without the written consent of each Lender; or (ix) release all or
substantially all of the collateral under the Security Documents without the
written consent of each Lender; provided further that no such agreement shall
                                -------- -------
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, any Issuing Bank or the Swingline Lender hereunder without the prior
written consent of the Administrative Agent, such Issuing Bank or the Swingline
Lender, as the case may be.

          (c)  Amendments of Security Documents.  Neither any Security Document
               --------------------------------
nor any provision thereof may be waived, amended or modified, nor may any
collateral thereunder be released, except pursuant to an agreement or agreements
in writing entered into by the Obligors party thereto, and by the Administrative
Agent with the consent of the Required Lenders.  Notwithstanding the foregoing,
the Administrative Agent shall, at the request of the Borrower, (i) agree to
release from the Lien of the Security Agreement any property that is the subject
of a permitted sale hereunder to a Person other than the Borrower or a
Subsidiary and (ii) agree to terminate the Security Agreement if (w) at the time
of such release, the aggregate amount of obligations of the Borrower and its
Subsidiaries secured by Liens permitted by any of clauses (c), (d), (e), (g) (to
the extent extending, renewing or replacing any of the Liens permitted by any of
clauses (c), (d) and (e)) and (h) does not exceed 15% of Consolidated Tangible
Net Worth, (x) the long term senior, unsecured debt of the Borrower is rated at
least Baa3 by Moody's and is rated at least BBB- by S&P, (y) no Default has
occurred and is continuing and (z) all collateral security provided with respect
to the Senior Note Documents and the Pari Passu Debt shall have been released.

          SECTION 10.03.  Expenses; Indemnity: Damage Waiver.
                          ----------------------------------

          (a)  Expenses.  The Borrower shall pay (i) all reasonable out-of-
               --------
pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges
<PAGE>

                                      -80-

and disbursements of counsel for the Administrative Agent, in connection with
the administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all out-of-
pocket expenses incurred by the Administrative Agent, the Issuing Bank or any
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, any Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Loan Documents, including its rights under this Section 10.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

          (b)  Indemnification by Borrower.  The Borrower shall indemnify the
               ---------------------------
Administrative Agent, any Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
                                                                   ----------
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or the other Loan Documents or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the an Issuing Bank to honor a demand for payment
under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), (iii)
any actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
--------
the extent that such losses, claims, damages, liabilities or related expenses
resulted from the gross negligence or wilful misconduct of such Indemnitee.

          (c)  Indemnification by Lenders.  To the extent that the Borrower
               --------------------------
fails to pay any amount required to be paid by it to the Administrative Agent,
an Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section 10.03, each Lender severally agrees to pay to the Administrative Agent,
such Issuing Bank or the Swingline Lender, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
--------
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, such Issuing Bank or the Swingline Lender in
its capacity as such.
<PAGE>

                                      -81-

          (d)  No Consequential Damages, Etc.  To the extent permitted by
               -----------------------------
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

          (e)  Payment Due Dates.  All amounts due under this Section 10.03
               -----------------
shall be payable promptly after written demand therefor.

          SECTION 10.04.  Successors and Assigns.
                          ----------------------

          (a)  Assignments Generally.  The provisions of this Agreement shall be
               ---------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that an Obligor may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by such
Obligor without such consent shall be null and void).  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the relevant Issuing Bank and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

          (b)  Assignments by Lenders.  Any Lender may assign to one or more
               ----------------------
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment to a Lender or an
     --------
Affiliate of a Lender, each of the Borrower and the Administrative Agent (and,
in the case of an assignment of all or a portion of a Commitment or any Lender's
obligations in respect of its LC Exposure or Swingline Exposure, the Issuing
Bank and the Swingline Lender) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed), (ii)
except in the case of an assignment to a Lender or an Affiliate of a Lender or
an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $10,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and (v) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; provided further that any consent of the Borrower
                              -------- -------
otherwise required under this paragraph shall not be required if an Event of
Default under clause (h) or (i) of Article VII has occurred and is continuing.
Subject to acceptance and recording thereof pursuant to paragraph (d) of this
Section 10.04, from and after the effective date specified in each Assignment
and Acceptance the assignee thereunder shall be a party hereto
<PAGE>

                                      -82-

and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section 10.04.

          (c)  Maintenance of Register.  The Administrative Agent, acting for
               -----------------------
this purpose as an agent of the Borrower, shall maintain at one of its offices
in The City of New York a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans and LC Disbursements
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register").  The entries in the Register shall be conclusive, and the Borrower,
---------
the Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be available for inspection by the Borrower, the
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

          (d)  Effectiveness of Assignments.  Upon its receipt of a duly
               ----------------------------
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section 10.04 and any written consent
to such assignment required by paragraph (b) of this Section 10.04, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

          (e)  Participations by Lenders.  Any Lender may, without the consent
               -------------------------
of the Borrower, the Administrative Agent, the Issuing Banks or the Swingline
Lender, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
------------
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (i) such Lender's obligations under this Agreement shall
        --------
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent, the Issuing Banks 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 Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
                                                                      --------
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that
<PAGE>

                                      -83-

affects such Participant. Subject to paragraph (f) of this Section 10.04, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section
10.04. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 10.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.17(f) as though it were a Lender.

          (f)  Rights of Participants.  A Participant shall not be entitled to
               ----------------------
receive any greater payment under Section 2.14 or 2.16 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower's prior written consent.  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.16 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.16(e) as though it were a Lender.

          (g)  Pledges by Lenders.  Any Lender may at any time pledge or assign
               ------------------
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 10.04 shall not apply to
any such pledge or assignment of a security interest; provided that no such
                                                      --------
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

          (h)  No Assignments to Borrower and Affiliates.  Anything in this
               -----------------------------------------
Section 10.04 to the contrary notwithstanding, no Lender may assign or
participate any interest in any Loan held by it hereunder to the Borrower or any
Affiliates or Subsidiaries of the Borrower without the prior consent of each
Lender.

          SECTION 10.05.  Survival. All covenants, agreements, representations
                          --------
and warranties made by the Obligors herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement and the
other Loan Documents shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans and issuance of any Letters of Credit, regardless of
any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, any Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and
10.03 and Article IX shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof.
<PAGE>

                                      -84-

          SECTION 10.06.  Counterparts; Integration; Effectiveness.   This
                          ----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Subject
to Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

          SECTION 10.07.  Severability.  Any provision of this Agreement held to
                          ------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

          SECTION 10.08.  Right of Setoff.  If an Event of Default shall have
                          ---------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Obligor against any of and all the obligations of such Obligor now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
10.08 are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.

          SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service of
                          --------------------------------------------------
Process.
-------

          (a)  Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
               -------------
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

          (b)  Submission to Jurisdiction.  EACH OBLIGOR HEREBY IRREVOCABLY AND
               --------------------------
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK
COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT.  Each
<PAGE>

                                      -85-

of the parties hereto agrees that a final judgment in any such 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. Nothing in this
Agreement shall affect any right that the Administrative Agent, any Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against any Obligor or its properties
in the courts of any jurisdiction.

          (c)  Waiver of Forum Matters.  Each Obligor hereby irrevocably and
               -----------------------
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section 10.09.  Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

          (d)  Service of Process.  Each party to this Agreement irrevocably
               ------------------
consents to service of process in the manner provided for notices in Section
10.01.  Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

          SECTION 10.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY
                          --------------------
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10.

          SECTION 10.11.  Headings. Article and Section headings and the Table
                          --------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

          SECTION 10.12.  Confidentiality. Each of the Administrative Agent, the
                          ---------------
Issuing Banks and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or the other
Loan Documents, (e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or the other Loan
<PAGE>

                                      -86-

Documents or the enforcement of rights hereunder or thereunder, (f) subject to
an agreement containing provisions substantially the same as those of this
Section 10.12, to any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement or
the other Loan Documents, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section 10.12 or (ii) becomes available to the Administrative
Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section 10.12, "Information"
                                                                  -----------
means all information received from any Obligor relating to such Obligor or its
business, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower; provided that, in the case of
                                     --------
information received from any Obligor after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section 10.12
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

          SECTION 10.13.  Perfection of Security Interests. Notwithstanding
                          --------------------------------
anything contained herein or in any Security Document to the contrary, neither
the Borrower nor any of its Subsidiaries shall be responsible for the failure of
the Lien created by the Security Agreement to be perfected (a) to the extent
that such failure results from the failure by the Collateral Agent to file
continuation statements under the Uniform Commercial Code in respect of such
Lien, (b) to the extent that such failure relates to Liens over letters of
credit supporting LC-Backed Receivables, provided that the aggregate amount of
LC-Backed Receivables in respect of which such Liens over the related letters of
credit are not perfected does not exceed 10% of the Borrowing Base, (c) to the
extent that such failure relates to Liens over Inventory stored in warehouses,
provided that the amount of the Borrowing Base attributable to such Inventory
shall not exceed $250,000 for any single warehouse and that the amount of the
Borrowing Base attributable to such Inventory and to Eligible Receivables
referred to in the following clause (d) shall not exceed the greater of
$20,000,000 or 5% of the amount of the Borrowing Base in the aggregate or (d) to
the extent that such failure relates to Liens over Eligible Receivables and
results from such Eligible Receivables being due from Governmental Authorities,
provided that the amount of the Borrowing Base attributable to such Eligible
Receivables and to Inventory referred to in the preceding clause (c) shall not
exceed the greater of $20,000,000 or 5% of the amount of the Borrowing Base in
the aggregate.

          If, as determined by the annual report of the independent collateral
auditor referred to in Section 5.01(g) hereof, the amount of Collateral subject
to any such failure exceeds any relevant amount referred to in clause (a), (b)
or (c) of the preceding sentence, then, (i) on such date (the "Trigger Date")
                                                               ------------
that the Borrower determines that such excess exists, the Borrower shall
immediately notify the Administrative Agent and the Collateral Agent of such
event, (ii) the Borrower shall furnish to the Administrative Agent on the
Trigger Date a Borrowing Base Certificate calculated on the basis of the
Borrowing Base Certificate most recently furnished hereunder but recalculating
the Borrowing Base with pro forma adjustments reflecting the exclusion of such
excess Collateral from the Eligible Receivables or Eligible Inventory, as the
case may be, (iii) the Borrower shall forthwith on the Trigger Date comply with
<PAGE>

                                      -87-

its obligations under Section 2.10(b) after giving effect to the Borrowing Base
as so calculated and (iv) not later than 30 days following the Trigger Date, the
Borrower shall have taken such action as shall be necessary to eliminate such
excess.  If the Borrower is in compliance with the preceding sentence, then (x)
except as expressly provided in the preceding sentence, no account or Inventory
shall be excluded from Eligible Receivables or Eligible Inventory, as the case
may be, (y) no Obligor shall be deemed to have breached any covenant or made any
untrue representation or warranty and (z) no Default or Event of Default shall
be deemed to have occurred or be continuing, in each of the cases referred to in
the foregoing clauses (x), (y) and (z) solely because any Lien created by the
Security Agreement shall fail to be perfected if such failure is described in
clause (a), (b) or (c) of the first sentence or this Section 10.13; except that,
notwithstanding the preceding provisions of this Section 10.13, the Borrower
shall from time to time upon the request of the Administrative Agent or the
Required Lenders deliver or cause to be delivered to the Collateral Agent in
pledge under the Security Agreement the letters of credit supporting LC-Backed
Receivables.

          SECTION 10.14.  Acknowledgements.  Each Obligor hereby acknowledges
                          ----------------
that:

          (a)  it has been advised by counsel in the negotiation, execution and
     delivery of this Agreement and the other Loan Documents;

          (b)  neither the Administrative Agent nor any Lender or Issuing Bank
     has any fiduciary relationship with or fiduciary duty to any Obligor
     arising out of or in connection with this Agreement or any of the other
     Loan Documents, and the relationship between the Administrative Agent, the
     Lenders and the Issuing Banks, on the one hand, and the Obligors, on the
     other hand, in connection herewith or therewith is solely that of debtor
     and creditor; and

          (c)  no joint venture is created hereby or by the other Loan Documents
     or otherwise exists by virtue of the transactions contemplated hereby among
     any party or parties hereto.

          SECTION 10.15.  European Monetary Union.
                          -----------------------

          (a)  Definitions.  As used herein, the following terms shall have the
               -----------
following meanings:

          "EMU" means economic and monetary union as contemplated in the Treaty
           ---
     on European Union.

          "EMU Legislation" means legislative measures of the European Council
           ---------------
     for the introduction of, changeover to or operation of a single or unified
     European currency (whether known as the Euro or otherwise), being in part
     the implementation of the third stage of EMU.

          "Euros" means the single currency of Participating Member States of
           -----
     the European Union, which shall be an Approved Foreign Currency and a
     Foreign Currency under this Agreement.
<PAGE>

                                      -88-

          "National Currency" means the Currency, other than the Euro, of a
           -----------------
     Participating Member State.

          "Participating Member State" means each state so described in any EMU
           --------------------------
     Legislation.

          "Target Operating Day" means any day that is not (i) a Saturday or
           --------------------
     Sunday, (ii) Christmas Day or New Year's Day or (iii) any other day on
     which the Trans-European Real-time Gross Settlement Operating System (or
     any successor settlement system) is not operating (as determined by the
     Administrative Agent).

          "Treaty on European Union" means the Treaty of Rome of March 25, 1957,
           ------------------------
     as amended by the Single European Act 1986 and the Maastricht Treaty (which
     was signed at Maastricht on February 7, 1992, and came into force on
     November 1, 1993), as amended from time to time.

          (b)  Effectiveness of Provisions.  The provisions of paragraphs (c)
               ---------------------------
through (h) of this Section 10.15 shall be effective on the Effective Date,
provided that, if and to the extent that any such provision relates to any state
--------
(or the Currency of such state) that is not a Participating Member State on the
Effective Date, such provision shall become effective in relation to such state
(and such Currency) at and from the date on which such state becomes a
Participating Member State.

          (c)  Redenomination and Alternative Currencies.  Each obligation under
               -----------------------------------------
this Agreement of a party to this Agreement which has been denominated in the
National Currency of a Participating Member State shall be redenominated in
Euros in accordance with EMU Legislation; provided that, if and to the extent
                                          --------
that any EMU Legislation provides that following the Effective Date an amount
denominated either in Euros or in the National Currency of a Participating
Member State and payable within the Participating Member State by crediting an
account of the creditor can be paid by the debtor either in Euros or in such
National Currency, any party to this Agreement shall be entitled to pay or repay
any such amount either in Euros or in such National Currency.

          (d)  Payments by the Administrative Agent Generally.  With respect to
               ----------------------------------------------
the payment of any amount denominated in Euros or in a National Currency, the
Administrative Agent shall not be liable to the Borrower or any of the Lenders
in any way whatsoever for any delay, or the consequences of any delay, in the
crediting to any account of any amount required by this Agreement to be paid by
the Administrative Agent if the Administrative Agent shall have taken all
relevant steps to achieve, on the date required by this Agreement, the payment
of such amount in immediately available, freely transferable, cleared funds (in
Euros or in such National Currency, as the case may be) to the account of any
Lender in the Principal Financial Center in the Participating Member State which
the Borrower or such Lender, as the case may be, shall have specified for such
purpose.  For the purposes of this paragraph, "all relevant steps" means all
such steps as may be prescribed from time to time by the regulations or
operating procedures of such clearing or settlement system as the Administrative
Agent may from time to time determine for the purpose of clearing or settling
payments in Euros or in such National Currency.
<PAGE>

                                      -89-

          (e)  Certain Rate Determinations.  For the purposes of determining the
               ---------------------------
date on which the LIBO Rate is determined under this Agreement for the Interest
Period for any Borrowing denominated in Euros (or in any National Currency),
references in this Agreement to Business Days shall be deemed to be references
to Target Operating Days.  In addition, if the Administrative Agent determines,
with respect to the Interest Period for any Borrowing denominated in a National
Currency, that there is no LIBOR displayed on the Screen for deposits
denominated in such National Currency, the LIBO Rate for such Interest Period
shall be based upon LIBOR displayed on the Screen for the offering of deposits
denominated in Euros.

          (f)  Basis of Accrual.  If the basis of accrual of interest or fees
               ----------------
expressed in this Agreement with respect to the Currency of any state that
becomes a Participating Member State shall be inconsistent with any convention
or practice in the interbank market for the basis of accrual of interest or fees
in respect of the Euro, such convention or practice shall replace such expressed
basis effective as of and from the date on which such state becomes a
Participating Member State; provided that, with respect to any Borrowing
                            --------
denominated in such Currency that is outstanding immediately prior to such date,
such replacement shall take effect at the end of the Interest Period therefor.

          (g)  Rounding.  Without prejudice and in addition to any method of
               --------
conversion or rounding prescribed by the EMU Legislation, each reference in this
Agreement to a minimum amount, or to a multiple of a specified amount, in a
National Currency to be paid to or by the Administrative Agent shall be replaced
by a reference to such reasonably comparable and convenient amount, or to a
multiple of such reasonably comparable and convenient amount, in Euros as the
Administrative Agent may from time to time specify.

          (h)  Other Consequential Changes.  Without prejudice to the respective
               ---------------------------
liabilities of the Borrower to the Lenders and the Lenders to the Borrower under
or pursuant to this Agreement, except as expressly provided in this Section
10.15, each provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
reasonably specify to be necessary or appropriate to reflect the introduction of
or changeover to the Euro in Participating Member States.

          SECTION 10.16.  Judgment Currency.  This is an international loan
                          -----------------
transaction in which the specification of Dollars or any Foreign Currency, as
the case may be (the "Specified Currency"), and payment in New York City or the
                      ------------------
country of the Specified Currency, as the case may be (the "Specified Place"),
                                                            ---------------
is of the essence, and the Specified Currency shall be the currency of account
in all events relating to Loans denominated in the Specified Currency. The
payment obligations of each Obligor under this Agreement shall not be discharged
or satisfied by an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid on
conversion to the Specified Currency and transfer to the Specified Place under
normal banking procedures does not yield the amount of the Specified Currency at
the Specified Place due hereunder. If for the purpose of obtaining judgment in
any court it is necessary to convert a sum due hereunder in the Specified
Currency into another currency (the "Second Currency"), the rate of exchange
                                     ---------------
that shall be applied shall be the rate at which in accordance with normal
banking procedures the Administrative Agent could purchase the Specified
Currency with the Second Currency on the Business Day next preceding
<PAGE>

                                      -90-

the day on which such judgment is rendered. The obligation of each Obligor in
respect of any such sum due from it to the Administrative Agent or any Lender
hereunder or under any other Loan Document (in this Section 10.16 called an
"Entitled Person") shall, notwithstanding the rate of exchange actually applied
 ---------------
in rendering such judgment, be discharged only to the extent that on the
Business Day following receipt by such Entitled Person of any sum adjudged to be
due hereunder in the Second Currency such Entitled Person may in accordance with
normal banking procedures purchase and transfer to the Specified Place the
Specified Currency with the amount of the Second Currency so adjudged to be due;
and each Obligor hereby, as a separate obligation and notwithstanding any such
judgment, agrees to indemnify such Entitled Person against, and to pay such
Entitled Person on demand, in the Specified Currency, the amount (if any) by
which the sum originally due to such Entitled Person in the Specified Currency
hereunder exceeds the amount of the Specified Currency so purchased and
transferred.
<PAGE>

                                      -91-

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

                                    SMITHFIELD FOODS, INC.

                                    By_________________________
                                      Name:   C. Larry Pope
                                      Title:   Vice President & C.F.O.

                             SUBSIDIARY GUARANTORS
                             ---------------------

THE SMITHFIELD PACKING COMPANY,     GWALTNEY OF SMITHFIELD, LTD.
 INCORPORATED

By_________________________         By_________________________
  Name:   C. Larry Pope                   Name:   C. Larry Pope
  Title:  Treasurer                       Title:  Treasurer

PATRICK CUDAHY INCORPORATED         JOHN MORRELL & CO.

By_________________________         By_________________________
  Name:   C. Larry Pope                   Name:   C. Larry Pope
  Title:  Treasurer                       Title:  Vice President

LYKES MEAT GROUP, INC.              BROWN'S OF CAROLINA, INC.

By_________________________         By_________________________
  Name:   C. Larry Pope                   Name:   C. Larry Pope
  Title:  Treasurer                       Title:  Treasurer

HANCOCK'S OLD FASHIONED COUNTRY     SUNNYLAND, INC.
 HAMS, INC.

By_________________________         By_________________________
  Name:   C. Larry Pope                   Name:   C. Larry Pope
  Title:  Treasurer                       Title:  Treasurer
<PAGE>

                                      -92-

NORTH SIDE FOODS, CORP.             CARROLL'S FOODS, INC.
 HAMS, INC.

By_________________________         By_________________________
  Name:   C. Larry Pope                   Name:   C. Larry Pope
  Title:  Treasurer                       Title:  Treasurer

CARROLL'S FOODS OF VIRGINIA, INC.   CIRCLE FOUR CORPORATION

By_________________________         By_________________________
  Name:   C. Larry Pope                   Name:   C. Larry Pope
  Title:  Treasurer                       Title:  Treasurer

CENTRAL PLAINS FARMS, INC.

By_________________________
  Name:   C. Larry Pope
  Title:  Treasurer
<PAGE>

                                      -93-

                            LENDERS
                            -------

                              THE CHASE MANHATTAN BANK,
                               individually and as Administrative Agent,

                                 By_________________________
                                    Name:   Gary L. Spevack
                                    Title:  Vice President

                              COOPERATIEVE CENTRALE RAIFFEISEN -
                              BOERENLEENBANK B.A. "RABOBANK
                              NEDERLAND", NEW YORK BRANCH,

                                 By_________________________
                                    Name:
                                    Title:

                                 By_________________________
                                    Name:
                                    Title:

                              AGRIBANK, FCB,

                                 By_________________________
                                    Name:
                                    Title:

                              CREDIT AGRICOLE INDOSUEZ,

                                 By_________________________
                                    Name:
                                    Title:
                                 By_________________________
                                    Name:
                                    Title:
<PAGE>

                                      -94-

                              DG BANK, DEUTSCHE
                               GENOSSENSCHAFTSBANK,
                               CAYMAN ISLANDS BRANCH,

                                 By_________________________
                                    Name:
                                    Title:
                                 By_________________________
                                    Name:
                                    Title:

                              BANK OF AMERICA, N.A.,

                                 By_________________________
                                    Name:
                                    Title:

                              U.S. BANCORP AG CREDIT, INC.,

                                 By_________________________
                                    Name:
                                    Title:

                              SUNTRUST BANK, ATLANTA,

                                 By_________________________
                                    Name:
                                    Title:

                                 By_________________________
                                    Name:
                                    Title:

                              BANK OF TOKYO-MITSUBISHI,
                                TRUST COMPANY

                                 By_________________________
                                    Name:
                                    Title:
<PAGE>

                                      -95-

                              DRESDNER BANK AG,

                                 By_________________________
                                    Name:
                                    Title:

                              FARM CREDIT SERVICES OF
                                AMERICA, PCA,

                                 By_________________________
                                    Name:
                                    Title:

                              HARRIS TRUST AND SAVINGS BANK,

                                 By_________________________
                                    Name:
                                    Title:

                              THE SANWA BANK, LIMITED,

                                 By_________________________
                                    Name:
                                    Title:

                              SUMITOMO BANK, LIMITED,
                                NEW YORK BRANCH,

                                 By_________________________
                                    Name:
                                    Title:

                              CAPE FEAR FARM CREDIT, ACA

                                 By_________________________
                                    Name:
                                    Title:
<PAGE>

                                      -96-

                              BANQUE NATIONALE DE PARIS

                                 By_________________________
                                    Name:
                                    Title:

                                 By_________________________
                                    Name:
                                    Title:

                              FIRST UNION NATIONAL BANK

                                 By_________________________
                                    Name:
                                    Title:

                              FARM CREDIT SERVICES OF MID-AMERICA,
                              PCA

                                 By_________________________
                                    Name:
                                    Title:

                              RZB FINANCE, LLC

                                 By_________________________
                                    Name:
                                    Title:

                                 By_________________________
                                    Name:
                                    Title:

                              AGFIRST, FCB

                                 By_________________________
                                    Name:
<PAGE>

                                      -97-

                                    Title:
<PAGE>

                                      -98-

                                 SCHEDULE 2.01

                                  COMMITMENTS

<TABLE>
<CAPTION>
                                          Total           Dollar        Multicurrency
Lenders                              Commitment ($)    Commitment ($)  Sub-Commitment ($)
-------                              --------------   ---------------  ------------------
<S>                                 <C>               <C>             <C>
The Chase Manhattan Bank              62,785,714.29    51,935,714.29   10,850,000.00

Bank of America, N.A.                 52,000,000.00    52,000,000.00        -0-

SunTrust Bank, Atlanta                52,000,000.00    43,600,000.00    8,400,000.00

Cooperatieve Centrale Raiffeisen
Boerenleenbank B.A. "Rabobank"
Nederland, New York Branch            44,285,714.29    38,035,714.29    6,250,000.00

Bank of Tokyo-Mitsubishi
Trust Company                         40,000,000.00    40,000,000.00        -0-

Cape Fear Farm Credit, ACA            40,000,000.00    40,000,000.00        -0-

Credit Agricole Indosuez              40,000,000.00    30,000,000.00   10,000,000.00

Farm Credit Services of
America, PCA                          35,000,000.00    35,000,000.00        -0-

Farm Credit Services of
Mid-America, PCA                      35,000,000.00    35,000,000.00        -0-

First Union National Bank             35,000,000.00    35,000,000.00        -0-

U.S. Bancorp Ag Credit, Inc.,         35,000,000.00    35,000,000.00        -0-

DG Bank, Deutsche
Genossenschaftsbank,
Cayman Islands Branch                 33,214,285.71    28,714,285.71    4,500,000.00

Sumitomo Bank, Limited,
New York Branch                       30,000,000.00    30,000,000.00        -0-

Agribank, FCB                         25,714,285.71    25,714,285.71        -0-

Banque Nationale de Paris             25,000,000.00    25,000,000.00        -0-

Harris Trust and Savings Bank         25,000,000.00    25,000,000.00        -0-

Dresdner Bank AG                      15,000,000.00    15,000,000.00        -0-

The Sanwa Bank, Limited               15,000,000.00    15,000,000.00        -0-

RZB Finance, LLC                      10,000,000.00    10,000,000.00        -0-
                                    ---------------  ---------------  --------------
                                    $650,000,000.00  $610,000,000.00  $40,000,000.00
</TABLE><PAGE>

                                                                  EXHIBIT 4.7(A)

--------------------------------------------------------------------------------

                             SMITHFIELD FOODS, INC.

                          --------------------------
                              AMENDED AND RESTATED

                            NOTE PURCHASE AGREEMENT
                          --------------------------

                          Dated as of October 31, 1999

     $9,852,942 8.41% Series B Senior Secured Notes Due August 1, 2006
     $40,000,000 8.34% Series C Senior Secured Notes Due August 1, 2003
     $9,000,000 9.80% Series D Senior Secured Notes Due August 1, 2003
     $9,250,000 10.75% Series E Senior Secured Notes Due August 1, 2005
     $100,000,000 8.52% Series F Senior Secured Notes Due August 1, 2006
     $14,000,000 9.85% Series G Senior Secured Notes Due November 1, 2006
     $14,779,412 8.41% Series H Senior Secured Notes Due August 1, 2004

                                 Guarantied By:
                          Gwaltney of Smithfield, Ltd.
                               John Morrell & Co.
                  The Smithfield Packing Company, Incorporated
                                   SFFC, Inc.
                          Patrick Cudahy Incorporated
                             Carroll's Foods, Inc.
                             Carroll's realty, Inc.
                          Carroll's Realty Partnership
                             North Side Foods Corp.
                             Lykes Meat Group, Inc.
                            Circle Four Corporation
                           Brown's of Carolina, Inc.
                               Brown's Farms, LLC
                       Carroll's Foods of Virginia, Inc.
                           Smithfield-Carroll's Farms
                           Central Plains Farms, Inc.
                      Smithfield Packing Real Estate, LLC
                               Murphy Farms, Inc.

--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS

                                                                            PAGE
1.    BACKGROUND; AMENDMENT AND RESTATEMENT..................................  1
 1.1    Background...........................................................  1
 1.2    Agreement and Consent of Noteholders to Amendment and Restatement;
           Waiver; Closing...................................................  2
 1.3    Failure of Conditions................................................  3
 1.4    Expenses.............................................................  3
 1.5    Collateral; Release..................................................  4
2.    WARRANTIES AND REPRESENTATIONS.........................................  5
 2.1    Material Adverse Change..............................................  5
 2.2    Financial Statements; Debt...........................................  5
 2.3    Subsidiaries and Affiliates..........................................  6
 2.4    Pending Litigation...................................................  6
 2.5    Title to Properties; UCC Matters.....................................  6
 2.6    Patents, Trademarks, Licenses, etc...................................  7
 2.7    Taxes................................................................  7
 2.8    Full Disclosure......................................................  8
 2.9    Corporate Organization and Authority.................................  8
 2.10   Restrictions on Company and Subsidiaries.............................  9
 2.11   Compliance with Law.................................................. 10
 2.12   Pension Plans........................................................ 10
 2.13   Certain Laws......................................................... 12
 2.14   Environmental Compliance............................................. 12
 2.15   Transaction is Legal and Authorized; Obligations are Enforceable..... 13
 2.16   Governmental Consent................................................. 14
 2.17   No Defaults.......................................................... 14
 2.18   Company and the Guarantors........................................... 14
 2.19   Solvency............................................................. 15
 2.20   True and Correct Copies.............................................. 15
3.    CLOSING CONDITIONS..................................................... 15
 3.1    Opinions of Counsel.................................................. 15
 3.2    Warranties and Representations True.................................. 15
 3.3    No Defaults.......................................................... 16
 3.4    Officers' Certificates............................................... 16
 3.5    Other Noteholders.................................................... 16
 3.6    Expenses............................................................. 16
 3.7    Joinder Agreement.................................................... 16
 3.8    Consents Under the Revolving Credit Agreements....................... 16
 3.9    Transaction Structuring Fee.......................................... 17
 3.10   Bladen Real Estate................................................... 17
 3.11   Compliance with this Agreement....................................... 17
 3.12   Proceedings Satisfactory............................................. 17
4.    PAYMENTS............................................................... 18
 4.1    Interest Payments.................................................... 18
 4.2    Scheduled Required Prepayments....................................... 19

                                       i
<PAGE>

 4.3    Offer to Prepay upon Change in Control............................... 21
 4.4    Optional Prepayments................................................. 23
 4.5    Notice of Optional Prepayment........................................ 23
 4.6    Pro Rata Payments.................................................... 24
 4.7    Notation of Notes on Prepayment...................................... 24
 4.8    No Other Optional Prepayments........................................ 25
5.    REGISTRATION; SUBSTITUTION OF NOTES.................................... 25
 5.1    Registration of Notes................................................ 25
 5.2    Exchange of Notes.................................................... 25
 5.3    Replacement of Notes................................................. 26
 5.4    Issuance Taxes....................................................... 26
6.    GENERAL COVENANTS...................................................... 26
 6.1    Payment of Taxes and Claims.......................................... 26
 6.2    Maintenance of Properties and Corporate Existence.................... 27
 6.3    Payment of Notes and Maintenance of Office........................... 28
 6.4    Current Ratio........................................................ 28
 6.5    Consolidated Working Capital......................................... 28
 6.6    Funded Debt.......................................................... 29
 6.7    Maintenance of Funded Debt........................................... 29
 6.8    Fixed Charges Coverage............................................... 29
 6.9    Restrictions on Dividends, etc....................................... 30
 6.10   Consolidated Tangible Net Worth...................................... 30
 6.11   Intentionally Left Blank............................................. 30
 6.12   Restricted Payments and Restricted Investments....................... 30
 6.13   Liens................................................................ 32
 6.14   Merger; Acquisition.................................................. 35
 6.15   Transfers of Property; Subsidiary Stock.............................. 36
 6.16   Trademark Subsidiaries............................................... 40
 6.17   Environmental Compliance............................................. 41
 6.18   Line of Business..................................................... 41
 6.19   Transactions with Affiliates......................................... 41
 6.20   Tax Consolidation.................................................... 42
 6.21   ERISA................................................................ 42
 6.22   Guaranties........................................................... 44
 6.23   Private Offering..................................................... 44
 6.24   Covenants Regarding the Bladen County Cogeneration Property.......... 45
7.    INFORMATION AS TO COMPANY AND THE GUARANTORS........................... 45
 7.1    Financial and Business Information................................... 45
 7.2    Officer's Certificates............................................... 49
 7.3    Accountants' Report.................................................. 49
 7.4    Inspection........................................................... 50
8.    EVENTS OF DEFAULT...................................................... 50
 8.1    Nature of Events..................................................... 50
 8.2    Default Remedies..................................................... 52
 8.3    Annulment of Acceleration of Notes................................... 54
9.    INTERPRETATION OF THIS AGREEMENT....................................... 55

                                      ii
<PAGE>

 9.1    Terms Defined........................................................ 55
 9.2    GAAP................................................................. 78
 9.3    Directly or Indirectly............................................... 78
 9.4    Section Headings, Table of Contents and Construction................. 79
 9.5    Governing Law........................................................ 79
10.    MISCELLANEOUS......................................................... 79
 10.1    Communications...................................................... 79
 10.2    Reproduction of Documents........................................... 80
 10.3    Survival............................................................ 81
 10.4    Successors and Assigns.............................................. 81
 10.5    Amendment and Waiver................................................ 81
 10.6    Payments, When Received............................................. 83
 10.7    Entire Agreement.................................................... 83
 10.8    Duplicate Originals, Execution in Counterpart....................... 83

                                      iii
<PAGE>

                             ANNEXES AND EXHIBITS

Annex 1      -   Information as to Noteholders
Annex 2      -   Information as to Company and Subsidiaries
Exhibit A1   -   Form of 8.41% Series B Senior Secured Note Due August 1, 2006
Exhibit A2   -   Form of 8.34% Series C Senior Secured Note Due August 1, 2003
Exhibit A3   -   Form of 9.80% Series D Senior Secured Note Due August 1, 2003
Exhibit A4   -   Form of 10.75% Series E Senior Secured Note Due August 1, 2005
Exhibit A5   -   Form of 8.52% Series F Senior Secured Note Due August 1, 2006
Exhibit A6   -   Form of 9.85% Series G Senior Secured Note Due November 1, 2006
Exhibit A7   -   Form of 8.41% Series H Senior Secured Note Due August 1, 2004
Exhibit B    -   Form of Company Counsel's Closing Opinion
Exhibit C    -   Form of Company Officers' Certificate
Exhibit D1   -   Form of Company Secretary's Certificate
Exhibit D2   -   Form of Guarantor Secretary's Certificates
Exhibit E    -   Assumption Agreement

                                      iv
<PAGE>

                             SMITHFIELD FOODS, INC.
                                ---------------
                              AMENDED AND RESTATED
                            NOTE PURCHASE AGREEMENT
                                ---------------

  $9,852,942 8.41% SERIES B SENIOR SECURED NOTES DUE AUGUST 1, 2006
  $40,000,000 8.34% SERIES C SENIOR SECURED NOTES DUE AUGUST 1, 2003
  $9,000,000 9.80% SERIES D SENIOR SECURED NOTES DUE AUGUST 1, 2003
  $9,250,000 10.75% SERIES E SENIOR SECURED NOTES DUE AUGUST 1, 2005
  $100,000,000 8.52% SERIES F SENIOR SECURED NOTES DUE AUGUST 1, 2006
  $14,000,000 9.85% SERIES G SENIOR SECURED NOTES DUE NOVEMBER 1, 2006
  $14,779,412 8.41% SERIES H SENIOR SECURED NOTES DUE AUGUST 1, 2004

                                                Dated as of October 31, 1999

[SEPARATELY ADDRESSED TO EACH OF THE
NOTEHOLDERS LISTED ON ANNEX 1]

Ladies and Gentlemen:

     SMITHFIELD FOODS, INC., a Virginia corporation (together with its
successors and assigns, the "COMPANY"), hereby agrees with you as follows:

1.  BACKGROUND; AMENDMENT AND RESTATEMENT

     1.1  BACKGROUND.

     Pursuant to those certain Note Purchase Agreements dated as of July 15,
1996 (collectively, as amended up to, but excluding, the Closing Date, the
"EXISTING NOTE PURCHASE AGREEMENT"), entered into by the Company with each of
the institutions named on Annex 1 hereto (the "NOTEHOLDERS"), the Company has
issued:

          (A) $2,825,000 in aggregate principal amount of its six and twenty-
     four one-hundredths percent (6.24%) Series A Senior Secured Notes due
     November 1, 1998 (the "SERIES A NOTES");

          (B) $9,852,942 in aggregate principal amount of its eight and forty-
     one one-hundredths percent (8.41%) Series B Senior Secured Notes due August
     1, 2006, substantially in the form of Exhibit A1 hereto (the "SERIES B
     NOTES");

                                       1
<PAGE>

          (C) $40,000,000 in aggregate principal amount of its eight and thirty-
     four one-hundredths percent (8.34%) Series C Senior Secured Notes due
     August 1, 2003, substantially in the form of Exhibit A2 hereto (the "SERIES
     C NOTES");

          (D) $9,000,000 in aggregate principal amount of its nine and eighty
     one-hundredths percent (9.80%) Series D Senior Secured Notes due August 1,
     2003, substantially in the form of Exhibit A3 hereto (the "SERIES D
     NOTES");

          (E) $9,250,000 in aggregate principal amount of its ten and seventy-
     five one-hundredths percent (10.75%) Series E Senior Secured Notes due
     August 1, 2005, substantially in the form of Exhibit A4 hereto (the "SERIES
     E NOTES");

          (F) $100,000,000 in aggregate principal amount of its eight and fifty-
     two one-hundredths percent (8.52%) Series F Senior Secured Notes due August
     1, 2006, substantially in the form of Exhibit A5 hereto ("SERIES F NOTES");

          (G) $14,000,000 in aggregate principal amount of its nine and eighty-
     five one-hundredths percent (9.85%) Series G Senior Secured Notes due
     November 1, 2006, substantially in the form of Exhibit A6 hereto (the
     "SERIES G NOTES"); and

          (H) $14,779,412 in aggregate principal amount of its eight and forty-
     one one-hundredths percent (8.41%) Series H Senior Secured Notes due August
     1, 2004, substantially in the form of Exhibit A7 hereto (the "SERIES H
     NOTES").

     The Series A Notes have matured and been paid in full.  The Series B Notes,
the Series C Notes, the Series D Notes, the Series E Notes, the Series F Notes,
the Series G Notes and the Series H Notes, including Notes of each such series
delivered from time to time pursuant to this Agreement and the other Note
Purchase Agreements, are herein referred to, individually, as a "NOTE," and
collectively, as the "NOTES."

     1.2  AGREEMENT AND CONSENT OF NOTEHOLDERS TO AMENDMENT AND RESTATEMENT;
          WAIVER; CLOSING.

          (A) AGREEMENT AND CONSENT; WAIVER. Subject to the satisfaction of the
     conditions set forth in Section 3, you agree, by execution of this
     Agreement, that (i) the Existing Note Purchase Agreement is hereby amended
     and restated in the form of this Agreement (ii) the Pre-Closing Events of
     Default are deemed not to have occurred and are permanently waived and you
     shall have no right to act in respect thereof and (iii) to the extent the
     provisions of the Financing Documents

                                       2
<PAGE>

     and this Agreement prohibit the transaction contemplated by the Assumption
     Agreement (including section 1.18 of the Packing-Bladen Deed of Trust,
     section 3.2 of the Packing Security Agreement and Section 6.15 of this
     Agreement), the obligations set forth therein are hereby waived solely for
     the purpose of permitting the transaction contemplated by the Assumption
     Agreement.

          (B) CLOSING DATE. The closing (the "CLOSING") of the transactions
     contemplated by this Agreement will be held contemporaneously with the
     execution and delivery of this Agreement (the "CLOSING DATE") at the office
     of [Bingham Dana LLP, One State Street, Hartford, Connecticut 06103].

          (C) OTHER NOTEHOLDERS. Contemporaneously with the execution and
     delivery hereof, the Company is entering into a separate Amended and
     Restated Note Purchase Agreement identical (except for the name, address
     and signature of the Noteholder) hereto (this Agreement and such other
     separate Amended and Restated Note Purchase Agreements, collectively, as
     may be amended from time to time, the "NOTE PURCHASE AGREEMENTS") with each
     other Noteholder.

     1.3  FAILURE OF CONDITIONS.

     If on the Closing Date the conditions specified in Section 3 to be
fulfilled at the Closing have not been fulfilled, you may thereupon elect to be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment, the Existing Note Purchase Agreement shall remain in full force
and effect and the waivers set forth in Section 1.2(a) shall be of no force or
effect.

     1.4  EXPENSES.

          (A) GENERALLY. Whether or not the transactions contemplated by this
     Agreement are consummated, the Company will promptly (and in any event
     within thirty (30) days of receiving any statement or invoice therefor) pay
     all fees, expenses and costs relating hereto, including but not limited to:

               (I)  the cost of reproducing the Financing Documents;

              (II)  the fees and disbursements of your special counsel;

             (III)  the fees and disbursements of the Security Trustee and
          its counsel;

              (IV)  the fees, expenses and costs incurred in complying with
          each of the conditions to closing set forth in Section 3;

                                       3
<PAGE>

               (V) all other expenses incurred in connection with the
          transactions contemplated by this Agreement; and

              (VI) the expenses relating to the consideration, negotiation,
          preparation or execution of any amendments, waivers or consents
          pursuant to the provisions hereof and of the other Financing
          Documents, whether or not any such amendments, waivers or consents are
          executed.

          (B) COUNSEL. Without limiting the generality of the foregoing, it is
     agreed and understood that the Company will pay, at the Closing, the
     statement for fees and disbursements of your special counsel presented at
     the Closing and the Company will also pay upon receipt of any statement
     thereof, each additional statement for fees and disbursements of your
     special counsel rendered after the Closing in connection with the issuance
     of the Notes or the matters referred to in Section 1.4(a)(vi).

          (C) SURVIVAL. The obligations of the Company under this Section 1.4
     shall survive the payment or prepayment of the Notes and the termination
     hereof.

     1.5  COLLATERAL; RELEASE.

     The Notes are secured pursuant to and entitled to all of the benefits of
the Security Documents.  In the event that at any time after the Closing Date
the Company shall have obtained an Acceptable Rating in respect of its long-
term, senior unsecured debt, the Company may give written notice to each holder
of Notes (which notice shall include copies of the letters to the Company from
Moody's and Standard & Poor's evidencing that such Acceptable Rating has been in
full force and effect for the one hundred eighty (180) day period immediately
preceding the date of such notice) requesting that the holders of the Notes
direct the Security Trustee to release the Collateral from the security
interests created by the Security Documents on a date specified in such notice
(the "COLLATERAL RELEASE DATE") that is not less than thirty (30) days and not
more than sixty (60) days after the date of such notice.  The holders of the
Notes agree to direct the Security Trustee to so release the Collateral,
provided that the Collateral Release Conditions have been satisfied and the
holders of the Notes and the Security Trustee shall have received an officer's
certificate, executed by a Senior Officer and dated the Collateral Release Date,
specifying that at the time of such release and after giving effect thereto,
each of the Collateral Release Conditions are satisfied.  Notwithstanding such
release of Collateral, the provisions of Section 6.13 hereof shall continue to
apply on and after the Collateral Release Date.

                                       4
<PAGE>

2.   WARRANTIES AND REPRESENTATIONS

     To induce you to enter into this Agreement, the Company warrants and
represents, as of the Closing Date, as follows:

     2.1  MATERIAL ADVERSE CHANGE.

     Since May 2, 1999, there has been no change in the business, prospects,
profits, Properties or condition (financial or otherwise) of the Company, except
changes that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

     2.2  FINANCIAL STATEMENTS; DEBT.

          (A) FINANCIAL STATEMENTS. The quarterly and annual financial
     statements most recently delivered to you pursuant to Section 7.1 of the
     Existing Note Purchase Agreement have been prepared in accordance with GAAP
     consistently applied and present fairly, in all material respects, the
     consolidated financial position of the Company and its consolidated
     subsidiaries as of such dates and the results of their operations and cash
     flows for the periods specified therein. Except as set forth on Part 2.2(a)
     of Annex 2, all Subsidiaries were subsidiaries during all of the periods
     covered by such financial statements.

          (B) DEBT. Part 2.2(b) of Annex 2 lists all Debt of the Company and the
     Subsidiaries as of the Closing Date (prior to giving effect to the
     transactions contemplated to occur on the Closing Date) which Debt is of an
     outstanding amount, in each case, in excess of fifty thousand dollars
     ($50,000), and provides the following information with respect to each item
     of such Debt:

               (I) the obligor in respect thereof,

              (II) the holder thereof,

             (III) the outstanding amount thereof and the interest rate or rates
          applicable thereto,

              (IV) the portion thereof classified as current in accordance
          with GAAP,

               (V) the final maturity thereof, and

              (VI) the collateral securing such Debt, if any.

                                       5
<PAGE>

     The aggregate amount of Debt of the Company and the Subsidiaries as of the
     Closing Date that is not set forth on Part 2.2(b) of Annex 2 does not
     exceed two million five hundred thousand dollars ($2,500,000).

     2.3  SUBSIDIARIES AND AFFILIATES.

     Part 2.3 of Annex 2 states:

          (A) the name of each of the Subsidiaries, its jurisdiction of
     incorporation and the percentage of its Voting Stock owned by the Company
     and each other Subsidiary; and

          (B) the name of each of the Affiliates and the nature of the
     affiliation.

     Each of the Company and the Subsidiaries has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien.  All such shares have been duly issued and are
fully paid and nonassessable.

     2.4  PENDING LITIGATION.

          (A) PENDING LITIGATION. There are no proceedings, actions or
     investigations pending or, to the knowledge of the Company, threatened
     against or affecting the Company or any Subsidiary in any court or before
     any Governmental Authority or arbitration board or tribunal that, in the
     aggregate for all such proceedings, actions and investigations, could
     reasonably be expected to have a Material Adverse Effect.

          (B) NO DEFAULTS. Neither the Company nor any Subsidiary is in default
     with respect to any judgment, order, writ, injunction or decree of any
     court, Governmental Authority, arbitration board or tribunal that, in the
     aggregate for all such defaults, could reasonably be expected to have a
     Material Adverse Effect.

     2.5  TITLE TO PROPERTIES; UCC MATTERS.

          (A) TITLE TO PROPERTIES. The Company and the Subsidiaries have valid
     title to all of the Property reflected in the most recent audited
     consolidated balance sheet referred to in Section 2.2(a) (except as sold or
     otherwise disposed of in the ordinary course of business), except for such
     failures to have valid title as are immaterial in the context of such
     balance sheet and that, in the aggregate for all such failures, could not
     reasonably be expected to have a Material Adverse Effect.

          (B) LEASES. All leases necessary for the conduct of the business of
     the Company and the Subsidiaries are valid and subsisting and are in

                                       6
<PAGE>

     full force and effect, except for such failures to be valid and subsisting
     that, in the aggregate for all such failures, could not reasonably be
     expected to have a Material Adverse Effect.

          (C) LIENS. All Property of the Company and the Subsidiaries is free
     from Liens not permitted by Section 6.13.

          (D) UCC MATTERS. Part 2.5(d) of Annex 2 sets forth with respect to the
     Company and each Guarantor:

               (I) each name under which such Person conducts or has conducted
          all or a portion of its business operations, and

              (II) the location of the principal executive office of each such
          Person.

     Neither the Company nor any Guarantor has changed its name or the name
     under which it conducts its business operations within the immediately
     preceding period of five (5) years.

     2.6  PATENTS, TRADEMARKS, LICENSES, ETC.

     Except as set forth on Part 2.6 of Annex 2, each of the Company and the
Subsidiaries owns, possesses or has the right to use all of the patents,
trademarks, service marks, trade names, copyrights and licenses, and rights with
respect thereto, necessary for the present and currently planned future conduct
of its business, without any known conflict with the rights of others.  The
Trademark Subsidiaries own all such patents, trademarks, service marks, trade
names, copyrights and licenses.  Part 2.6 of Annex 2 sets forth the identity of
each of the Trademark Subsidiaries on the Closing Date.

     2.7  TAXES.

          (A) RETURNS FILED; TAXES PAID. All tax returns required to be filed by
     each of the Company and the Subsidiaries and any other Person with which
     the Company or any Subsidiary files or has filed a consolidated return in
     any jurisdiction have in fact been filed on a timely basis, and all taxes,
     assessments, fees and other governmental charges upon each of the Company
     and the Subsidiaries and any such Person, and upon any of their respective
     Properties, income or franchises, that are due and payable have been paid.
     All liabilities of the Company and the Subsidiaries with respect to federal
     income taxes have been finally determined except with respect to the fiscal
     years disclosed on Part 2.7 of Annex 2, which are the only fiscal years not
     closed by the completion of an audit or the expiration of the statute of
     limitations. There is currently in effect no tax sharing, tax allocation or
     similar agreement providing for the manner in which tax payments (whether
     in respect of federal or state

                                       7
<PAGE>

     income or other taxes) owing by the members of the affiliated group of
     which the Company is the "common parent" (as defined in section 1504 of the
     IRC) are allocated between any member of such group and any Person other
     than the Company or a Subsidiary.

          (B)  BOOK PROVISIONS ADEQUATE.

               (I) The amount of the liability for taxes reflected in the most
          recent balance sheet referred to in Section 2.2(a) is an adequate
          provision for taxes as of the date of such balance sheet (including,
          without limitation, any payment due pursuant to any tax sharing
          agreement) as are or may become payable by any one or more of the
          Company, any Subsidiary and the other Persons consolidated with the
          Company in such financial statements in respect of all tax periods
          ending on or prior to such dates.

              (II) Neither the Company nor any Subsidiary knows of any proposed
          additional tax assessment against it or any such Person that is not
          reflected in full in the most recent balance sheet referred to in
          Section 2.2(a).

     2.8  FULL DISCLOSURE.

     The financial statements referred to in Section 2.2(a) do not, nor does any
Financing Document or any written statement furnished by or on behalf of the
Company or any Subsidiary to you in connection with the negotiation or the
closing of the transactions contemplated by this Agreement, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein not misleading when viewed in the aggregate.  There
is no fact that the Company has not disclosed to you in writing that has had or,
so far as the Company can now reasonably foresee, could reasonably be expected
to have a Material Adverse Effect.

     2.9  CORPORATE ORGANIZATION AND AUTHORITY.

     The Company and each Subsidiary:

          (A) is a corporation, limited liability company or partnership duly
     organized, validly existing and in good standing (to the extent that such
     concept is applicable) under the laws of its jurisdiction of organization;

          (B) has all legal and corporate, limited liability company or
     partnership, as the case may be, power and authority to own and operate its
     Properties and to carry on its business as now conducted and as presently
     proposed to be conducted;

                                       8
<PAGE>

          (C) has all necessary licenses, certificates and permits to own and
     operate its Properties and to carry on its business as now conducted and as
     presently proposed to be conducted, except where the failure to have such
     licenses, certificates and permits, in the aggregate, could not reasonably
     be expected to have a Material Adverse Effect; and

          (D) has duly qualified or has been duly licensed, and is authorized to
     do business and is in good standing, as a foreign corporation, limited
     liability company or foreign partnership, as the case may be, in each state
     in the United States of America and in each other jurisdiction where the
     failure to be so qualified or licensed and authorized and in good standing,
     in the aggregate for all such failures, could reasonably be expected to
     have a Material Adverse Effect.

     2.10 RESTRICTIONS ON COMPANY AND SUBSIDIARIES.

          (A) Neither the Company nor any Subsidiary:

               (I) is a party to any contract or agreement, or subject to any
          charter, bylaw, partnership agreement or other restriction that, in
          the aggregate for all such contracts, agreements, constitutive
          documents and other restrictions (assuming that all such contracts and
          agreements are performed in accordance with their respective terms),
          could reasonably be expected to have a Material Adverse Effect; or

              (II) has agreed or consented to cause or permit in the future
          (upon the happening of a contingency or otherwise) any of its
          Property, whether now owned or hereafter acquired, to be subject to a
          Lien not permitted by Section 6.13.

          (B) Neither the Company nor any Guarantor is a party to any contract
     or agreement that restricts the right or ability of the Company or such
     Subsidiary to incur Debt, other than this Agreement and the agreements
     listed in Part 2.10(b) of Annex 2 (none of which restricts the performance
     of the Company hereunder or under the Notes and none of which restricts the
     guaranty of the Notes by any of the Guarantors under the Joint and Several
     Guaranty).

                                       9
<PAGE>

     2.11 COMPLIANCE WITH LAW.

     Neither the Company nor any Subsidiary:

          (A) is in violation of any law, ordinance, governmental rule or
     regulation to which it is subject (including, without limitation, those
     relating to zoning and planning, building, subdivision, inland wetland and
     environmental and hazardous waste disposal); or

          (B) has failed to obtain any license, certificate, permit, franchise
     or other governmental authorization necessary to the ownership of its
     Property or to the conduct of its business (including, without limitation,
     to the extent required, building, zoning, subdivision, traffic and
     environmental approvals and certificates of occupancy);

which violations or failures to obtain, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

     2.12 PENSION PLANS.

          (A) DISCLOSURE. Part 2.12(a) of Annex 2 identifies all ERISA
     Affiliates and all "employee benefit plans" with respect to which the
     Company or any "affiliate" of the Company is a "party-in-interest" or in
     respect of which the Notes could constitute an "employer security"
     ("employee benefit plan" and "party-in-interest" have the meanings
     specified in section 3 of ERISA and "affiliate" and "employer security"
     have the meanings specified in section 407(d) of ERISA).

          (B) PROHIBITED TRANSACTIONS. The execution and delivery of this
     Agreement will not involve any transaction that is subject to the
     prohibitions of section 406 of ERISA or in connection with which a tax
     could be imposed pursuant to section 4975(c)(1)(A) through section 4975(D),
     inclusive, of the IRC.

          (C) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS. Except as
     set forth on Part 2.12(c) of Annex 2, the present value of all benefits,
     determined as of the most recent valuation date for such benefits (as
     provided in Section 6.21(c)), vested under each Pension Plan does not
     exceed the value of the assets of such Pension Plan allocable to such
     vested benefits, determined as of the most recent valuation date (as
     provided in Section 6.21(c)).

          (D)  ERISA REQUIREMENTS.  Each of the Company and the ERISA
     Affiliates:

                                      10
<PAGE>

               (I) has fulfilled all obligations under the minimum funding
          standards of ERISA and the IRC with respect to each Pension Plan that
          is not a Multiemployer Plan;

              (II) is in compliance in all material respects with all other
          applicable provisions of ERISA and the IRC with respect to each
          Pension Plan and each Multiemployer Plan; and

             (III) has not incurred any liability under Title IV of ERISA to the
          PBGC (other than in respect of required insurance premiums, all of
          which that are due having been paid), with respect to any Pension
          Plan, any Multiemployer Plan or any trust established thereunder.

          (E) ACCUMULATED FUNDING DEFICIENCY. Except as set forth in Part
     2.12(e) of Annex 2, no accumulated funding deficiency (as defined in
     section 302 of ERISA and section 412 of the IRC), whether or not waived,
     exists with respect to any Pension Plan.

          (F) REPORTABLE EVENTS. No Pension Plan or trust created thereunder has
     been terminated, and there have been no "reportable events" (as such term
     is defined in section 4043 of ERISA), with respect to any Pension Plan or
     trust created thereunder or with respect to any Multiemployer Plan, which
     reportable event or events will or could result in the termination of such
     Pension Plan or Multiemployer Plan and give rise to a liability of the
     Company or any ERISA Affiliate in respect thereof.

          (G) MULTIEMPLOYER PLANS. Other than as set forth on Part 2.12(g) of
     Annex 2, neither the Company nor any ERISA Affiliate is an employer
     required to contribute to any Multiemployer Plan. Neither the Company nor
     any ERISA Affiliate has incurred, nor is expected to incur, any withdrawal
     liability (that has not previously been fully satisfied) under ERISA with
     respect to any Multiemployer Plan, the effect of which, individually or in
     the aggregate, could reasonably be expected to have a Material Adverse
     Effect. No Multiemployer Plans have been terminated under section 4041A of
     ERISA, have been placed in reorganization status under Title IV of ERISA,
     or have been determined to be "insolvent" (as such term is defined in
     section 4245 of ERISA).

          (H) MULTIPLE EMPLOYER PENSION PLANS. Neither the Company nor any ERISA
     Affiliate is a "contributing sponsor" (as such term is defined in section
     4001 of ERISA) in any Multiple Employer Pension Plan and neither the
     Company nor any ERISA Affiliate has incurred (without fully satisfying the
     same), or reasonably expects to incur, withdrawal liability in respect of
     any Multiple Employer Pension Plan, which

                                      11
<PAGE>

     withdrawal liability could reasonably be expected to have a Material
     Adverse Effect.

          (I) FOREIGN PENSION PLAN. Except as set forth in Part 2.12(i) of Annex
     2, no Foreign Pension Plans presently exist and neither the Company nor any
     Subsidiary has any present or future obligations in respect of any Foreign
     Pension Plan.

     2.13 CERTAIN LAWS.

     The execution and delivery of this Agreement by the Company and the Joinder
Agreement by the New Guarantors, and the performance under the Financing
Documents by the Company and the Subsidiaries:

          (A) is not subject to regulation under the Investment Company Act of
     1940, as amended, the Public Utility Holding Company Act of 1935, as
     amended, the Transportation Acts, as amended, or the Federal Power Act, as
     amended, and

          (B) does not violate any provision of any statute or other rule or
     regulation of any Governmental Authority applicable to the Company or any
     Subsidiary.

     2.14  ENVIRONMENTAL COMPLIANCE.

          (A) COMPLIANCE. Except as set forth in Part 2.14(a) of Annex 2,
     neither the Company nor any Subsidiary is in violation of any Environmental
     Protection Law in effect in any jurisdiction where it currently is doing
     business or owns Property, except for such violations that, in the
     aggregate for all such violations, could not reasonably be expected to have
     a Material Adverse Effect.

          (B) LIABILITY. Except as set forth in Part 2.14(b) of Annex 2, neither
     the Company nor any Subsidiary is subject to any liability under any
     Environmental Protection Law that, in the aggregate for all such
     liabilities, could reasonably be expected to have a Material Adverse
     Effect.

          (C) NOTICES. Except as set forth in Part 2.14(c) of Annex 2, neither
     the Company nor any Subsidiary has received any:

              (I) notice from any Governmental Authority by which any of its
     currently or previously owned or leased Properties has been identified in
     any manner by any Governmental Authority as a hazardous substance disposal
     or removal site, "Super Fund" clean-up site, or other clean-up site or
     candidate for removal or closure pursuant to any Environmental Protection
     Law;

                                      12
<PAGE>

               (II) notice of any Lien arising under or in connection with any
          Environmental Protection Law that has attached to any revenues of, or
          to, any of its currently or previously owned or leased Properties; or

              (III) communication from any Governmental Authority concerning any
          action or omission by the Company or such Subsidiary in connection
          with its currently or previously owned or leased Properties resulting
          in the release of any Hazardous Substance or resulting in any
          violation of any Environmental Protection Law;

     in each case where the effect of which, in the aggregate for all such
     notices and communications, could reasonably be expected to have a Material
     Adverse Effect.

     2.15 TRANSACTION IS LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.

          (A) TRANSACTION IS LEGAL AND AUTHORIZED. Each of the execution and
     delivery of this Agreement by the Company and the Joinder Agreement by each
     of the Guarantors and compliance by the Company and each of the Guarantors
     with all of their respective obligations under the Financing Documents:

               (I) is within the corporate powers of the Company and each of the
          Guarantors;

              (II) is legal and does not conflict with, result in any breach in
          any of the provisions of, constitute a default under, or result in the
          creation of any Lien upon any Property of the Company or any
          Subsidiary under the provisions of, any agreement, charter instrument,
          bylaw or other instrument to which it is a party or by which it or any
          of its Property may be bound; and

             (III) does not give rise to a right or option of any other Person
          under any agreement or other instrument, which right or option could
          reasonably be expected to have a Material Adverse Effect.

          (B) OBLIGATIONS ARE ENFORCEABLE. Each of this Agreement and the
     Joinder Agreement has been duly authorized by all necessary action on the
     part of each Obligor party thereto and has been executed and delivered by
     one or more duly authorized officers of each Obligor party thereto, and
     each Financing Document constitutes a legal, valid and binding obligation
     of each Obligor party thereto, enforceable in

                                      13
<PAGE>

     accordance with its terms, except that the enforceability of the Financing
     Documents may be:

               (I) limited by applicable bankruptcy, reorganization,
          arrangement, insolvency, moratorium or other similar laws affecting
          the enforceability of creditors' rights generally; and

              (II) subject to the availability of equitable remedies.

     2.16 GOVERNMENTAL CONSENT.

     Neither the nature of the Company or any Subsidiary, or of any of their
respective businesses or Properties, nor any relationship between the Company or
any Subsidiary and any other Person, nor any circumstance in connection with the
execution and delivery of this Agreement or the Joinder Agreement, is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority on the part of the Company or any
Guarantor as a condition to the execution and delivery of this Agreement or the
Joinder Agreement.

     2.17 NO DEFAULTS.

          (A) THE NOTES. No event has occurred and no condition exists that,
     upon the execution and delivery of this Agreement (and giving effect to the
     waiver set forth in Section 1.2(a)) or the Joinder Agreement, would
     constitute a Default or an Event of Default.

          (B) CHARTER INSTRUMENTS, OTHER AGREEMENTS. Neither the Company nor any
     Subsidiary is in violation in any respect of any term of any charter
     instrument, bylaw, partnership agreement or other constitutive document or
     instrument. Neither the Company nor any Subsidiary is in violation in any
     respect of any term in any agreement or other instrument to which it is a
     party or by which it or any of its Property may be bound except for such
     violations that, in the aggregate for all such violations, could not
     reasonably be expected to have a Material Adverse Effect.

     2.18 COMPANY AND THE GUARANTORS.

     The Company and the Guarantors are operated as part of one consolidated
business entity and are directly dependent upon each other for and in connection
with their respective business activities and their respective financial
resources.  The Company and each of the Original Guarantors received direct
economic and financial benefits from the Debt incurred under the Note Purchase
Agreements by the Company and the incurrence of such Debt was in the best
interests of the Company and each of the Original Guarantors.

                                      14
<PAGE>

     2.19 SOLVENCY.

     The fair value of the business and assets of the Company and each Guarantor
will be in excess of the amount that will be required to pay its liabilities
(including, without limitation, contingent, subordinated, unmatured and
unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by this Agreement and the Joinder Agreement.  Neither the Company
nor any Guarantor, after giving effect to the transactions contemplated by this
Agreement and the Joinder Agreement, will be engaged in any business or
transaction, or about to engage in any business or transaction, for which such
Person has unreasonably small assets or capital (within the meaning of
applicable law, including, without limitation, Section 548 of the United States
Bankruptcy Code), and neither the Company nor any Guarantor has any intent to

          (A) hinder, delay or defraud any entity to which it is, or will
     become, on or after the Closing Date, indebted, or

          (B) incur debts that would be beyond its ability to pay as they
     mature.

     2.20 TRUE AND CORRECT COPIES.

     The Company has delivered to you or your special counsel true and correct
copies of (a) each Revolving Credit Agreement (including, without limitation,
all schedules and exhibits thereto and all agreements delivered in connection
therewith) of the Company or any Subsidiary in effect on the Closing Date and
(b) the 1999 Note Purchase Agreement.

3.   CLOSING CONDITIONS

     The effectiveness of this Agreement, as to the parties hereto, is subject
to the following conditions precedent:

     3.1  OPINIONS OF COUNSEL.

     You shall have received a closing opinion from McGuire, Woods, Battle &
Boothe, counsel for the Company and the Subsidiaries, dated the Closing Date,
and substantially in the forms set forth in Exhibit B, and as to such other
matters as you may reasonably request.  The Company hereby requests and directs
its counsel to deliver such closing opinion to you and the other Noteholders.

                                      15
<PAGE>

     3.2  WARRANTIES AND REPRESENTATIONS TRUE.

     The warranties and representations contained in Section 2 shall be true on
the Closing Date with the same effect as though made on and as of that date.

     3.3  NO DEFAULTS.

     Except for the Pre-Closing Events of Default, no "Default" or "Event of
Default" (as such terms are defined in the Existing Note Purchase Agreements)
shall exist in respect of the Notes, this Agreement or the Existing Note
Purchase Agreements.

     3.4  OFFICERS' CERTIFICATES.

     You shall have received:

          (A) a certificate dated the Closing Date and signed by the President,
     a Vice-President, the Controller, the Treasurer or an Assistant Treasurer
     of the Company, substantially in the form of Exhibit C, certifying that the
     conditions specified in Section 3.2, Section 3.3 and Section 3.10 have been
     fulfilled and that no Default or Event of Default exists on the Closing
     Date;

          (B) a certificate dated the Closing Date and signed by the Secretary
     or an Assistant Secretary of the Company, substantially in the form of
     Exhibit D1, with respect to the matters set forth therein; and

          (C) separate certificates dated the Closing Date and signed by the
     Secretary or an Assistant Secretary of each the New Guarantors,
     substantially in the form of Exhibit D2, with respect to the matters set
     forth therein.

     3.5  OTHER NOTEHOLDERS.

     None of the other Noteholders shall have failed to execute and deliver a
Note Purchase Agreement on the Closing Date.

     3.6  EXPENSES.

     All fees and disbursements required to be paid on or before the Closing
Date pursuant to Section 1.4 shall have been paid in full.

     3.7  JOINDER AGREEMENT.

     Each of the New Guarantors shall have executed and delivered to you the
Joinder Agreement, in form and substance satisfactory to you and your special
counsel, pursuant to which the New Guarantors shall become Guarantors under the
Joint and Several Guaranty.

                                      16
<PAGE>

     3.8  CONSENTS UNDER THE REVOLVING CREDIT AGREEMENTS.

     The Company shall have delivered to you copies of all consents (in form and
substance satisfactory to you and your special counsel) required under the
Revolving Credit Agreements to permit the Company and the Guarantors to enter
into and perform their respective obligations hereunder and under the Joint and
Several Guaranty.

     3.9  TRANSACTION STRUCTURING FEE.

     The Company shall have paid to each Noteholder a non-refundable transaction
restructuring fee equal to fifteen hundredths of one percent (0.15%) of the
aggregate principal amount of the Notes held by such Noteholder on the Closing
Date.

     3.10 BLADEN REAL ESTATE.

     Packing LLC shall have executed and delivered (a) the Assumption Agreement,
and (b) such Uniform Commercial Financing Statements as may be necessary or
desirable to evidence the Liens granted by Packing LLC pursuant to the Packing
Security Agreement and the Packing-Bladen Deed of Trust.  Packing LLC shall have
provided the Security Trustee with evidence that the title insurance policy
existing with respect to the Property which is the subject of the Packing-Bladen
Deed of Trust is in full force and effect and insures the interest of the owner
and the mortgagee in the manner contemplated by the title insurance policy
originally issued to the Security Trustee with respect to such Property.  All
other insurance policies required by the Packing-Bladen Deed of Trust and this
Agreement shall be in full force and effect.

     3.11 COMPLIANCE WITH THIS AGREEMENT.

     Each of the Company and the Guarantors shall have performed and complied
with all agreements and conditions contained herein that are required to be
performed or complied with by the Company and the Guarantors on or prior to the
Closing Date, and such performance and compliance shall remain in effect on the
Closing Date.

3.12        PROCEEDINGS SATISFACTORY.

     All proceedings taken in connection with the transactions contemplated
hereby and all documents and papers relating thereto shall be satisfactory to
you and your special counsel.  You and your special counsel shall have received
copies of such documents and papers as you or they may reasonably request in
connection therewith or in connection with your special counsel's closing
opinion, all in form and substance satisfactory to you and your special counsel.

                                      17
<PAGE>

4.   PAYMENTS

     4.1  INTEREST PAYMENTS.

     Interest shall accrue on the unpaid principal balance of the Notes on the
basis of a 360-day year of twelve 30-day months:

          (A) SERIES B NOTES. With respect to the Series B Notes, at the rate of
     8.41% per annum and shall be payable to the holders of the Series B Notes,
     in arrears, quarterly on the first day of February, May, August and
     November in each year, commencing on August 1, 1996, until the principal
     amount of the Series B Notes in respect of which such interest shall have
     accrued shall become due and payable, and interest shall accrue on any
     overdue principal (including any overdue prepayment of principal), Make-
     Whole Amount, if any, and (to the extent permitted by applicable law) on
     any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 10.41% per annum,

          (B) SERIES C NOTES. With respect to the Series C Notes, at the rate of
     8.34% per annum and shall be payable to the holders of the Series C Notes,
     in arrears, quarterly on the first day of February, May, August and
     November in each year, commencing on August 1, 1996, until the principal
     amount of the Series C Notes in respect of which such interest shall have
     accrued shall become due and payable, and interest shall accrue on any
     overdue principal (including any overdue prepayment of principal), Make-
     Whole Amount, if any, and (to the extent permitted by applicable law) on
     any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 10.34% per annum,

          (C) SERIES D NOTES. With respect to the Series D Notes, at the rate of
     9.80% per annum and shall be payable to the holders of the Series D Notes,
     in arrears, quarterly on the first day of February, May, August and
     November in each year, commencing on August 1, 1996, until the principal
     amount of the Series D Notes in respect of which such interest shall have
     accrued shall become due and payable, and interest shall accrue on any
     overdue principal (including any overdue prepayment of principal), Make-
     Whole Amount, if any, and (to the extent permitted by applicable law) on
     any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 11.80% per annum,

          (D) SERIES E NOTES. With respect to the Series E Notes, at the rate of
     10.75% per annum and shall be payable to the holders of the Series E Notes,
     in arrears, quarterly on the first day of February, May,

                                      18
<PAGE>

     August and November in each year, commencing on August 1, 1996, until the
     principal amount of the Series E Notes in respect of which such interest
     shall have accrued shall become due and payable, and interest shall accrue
     on any overdue principal (including any overdue prepayment of principal),
     Make-Whole Amount, if any, and (to the extent permitted by applicable law)
     on any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 12.75% per annum,

          (E) SERIES F NOTES. With respect to the Series F Notes, at the rate of
     8.52% per annum and shall be payable to the holders of the Series F Notes,
     in arrears, quarterly on the first day of February, May, August and
     November in each year, commencing on August 1, 1996, until the principal
     amount of the Series F Notes in respect of which such interest shall have
     accrued shall become due and payable, and interest shall accrue on any
     overdue principal (including any overdue prepayment of principal), Make-
     Whole Amount, if any, and (to the extent permitted by applicable law) on
     any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 10.52% per annum, and

          (F) SERIES G NOTES. With respect to the Series G Notes, at the rate of
     9.85% per annum and shall be payable to the holders of the Series G Notes,
     in arrears, quarterly on the first day of February, May, August and
     November in each year, commencing on August 1, 1996, until the principal
     amount of the Series G Notes in respect of which such interest shall have
     accrued shall become due and payable, and interest shall accrue on any
     overdue principal (including any overdue prepayment of principal), Make-
     Whole Amount, if any, and (to the extent permitted by applicable law) on
     any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 11.85% per annum, and

          (G) SERIES H NOTES. With respect to the Series H Notes, at the rate of
     8.41% per annum and shall be payable to the holders of the Series H Notes,
     in arrears, quarterly on the first day of February, May, August and
     November in each year, commencing on May 1, 2000, until the principal
     amount of the Series H Notes in respect of which such interest shall have
     accrued shall become due and payable, and interest shall accrue on any
     overdue principal (including any overdue prepayment of principal), Make-
     Whole Amount, if any, and (to the extent permitted by applicable law) on
     any overdue installment of interest at a rate equal to the lesser of (i)
     the highest rate allowed by applicable law, and (ii) 10.41% per annum.

                                      19
<PAGE>

     4.2  SCHEDULED REQUIRED PREPAYMENTS

          (A) SERIES B NOTES. In addition to paying the entire then outstanding
     principal amount and the interest due on the Series B Notes on the maturity
     date thereof (August 1, 2006), the Company shall prepay, and there shall
     become due and payable, seven hundred fifty-eight thousand dollars
     ($758,000) in aggregate principal amount of the Series B Notes on the first
     day of February, May, August and November in each year, commencing on
     August 1, 2003 and ending on May 1, 2006, inclusive. Each such prepayment
     shall be at one hundred percent (100%) of the amount prepaid, together with
     interest accrued thereon to the date of prepayment.

          (B) SERIES C NOTES. There shall be no required prepayments in respect
     of the Series C Notes. The entire principal amount of the Series C Notes
     remaining outstanding on August 1, 2003, together with accrued unpaid
     interest thereon, shall be due and payable on such date.

          (C) SERIES D NOTES. In addition to paying the entire then outstanding
     principal amount and the interest due on the Series D Notes on the maturity
     date thereof (August 1, 2003), the Company shall prepay, and there shall
     become due and payable, one hundred eighty-seven thousand five hundred
     dollars ($187,500) in aggregate principal amount of the Series D Notes on
     the first day of February, May, August and November in each year,
     commencing on August 1, 1996 and ending on May 1, 2003, inclusive. Each
     such prepayment shall be at one hundred percent (100%) of the amount
     prepaid, together with interest accrued thereon to the date of prepayment.

          (D) SERIES E NOTES. In addition to paying the entire then outstanding
     principal amount and the interest due on the Series E Notes on the maturity
     date thereof (August 1, 2005), the Company shall prepay, and there shall
     become due and payable, two hundred fifty thousand dollars ($250,000) in
     aggregate principal amount of the Series E Notes on the first day of
     February, May, August and November in each year, commencing on August 1,
     1996 and ending on May 1, 2005, inclusive. Each such prepayment shall be at
     one hundred percent (100%) of the amount prepaid, together with interest
     accrued thereon to the date of prepayment.

          (E) SERIES F NOTES. There shall be no required prepayments in respect
     of the Series F Notes. The entire principal amount of the Series F Notes
     remaining outstanding on August 1, 2006, together with accrued unpaid
     interest thereon, shall be due and payable on such date.

          (F) SERIES G NOTES. In addition to paying the entire then outstanding
     principal amount and the interest due on the Series G Notes on the maturity
     date thereof (November 1, 2006), the Company shall

                                      20

<PAGE>

     prepay, and there shall become due and payable, three hundred thirty-three
     thousand three hundred thirty-three and 33/100 dollars ($333,333.33) in
     aggregate principal amount of the Series G Notes on the first day of
     February, May, August and November in each year, commencing on August 1,
     1996 and ending on August 1, 2006, inclusive. Each such prepayment shall be
     at one hundred percent (100%) of the amount prepaid, together with interest
     accrued thereon to the date of prepayment.

          (G) SERIES H NOTES. In addition to paying the entire then outstanding
     principal amount and the interest due on the Series H Notes on the maturity
     date thereof (August 1, 2004), the Company shall prepay, and there shall
     become due and payable, seven million three hundred eighty-nine thousand
     seven hundred six dollars ($7,389,706) in aggregate principal amount of the
     Series H Notes on August 1, 2002. Such prepayment shall be at one hundred
     percent (100%) of the amount prepaid, together with interest accrued
     thereon to the date of prepayment.

     4.3  OFFER TO PREPAY UPON CHANGE IN CONTROL.

          (A) NOTICE AND OFFER. In the event of either

              (I) a Change in Control, or

             (II) the obtaining of knowledge of a Control Event by any officer
          of the Company,

     then the Company will, within three (3) Business Days of (x) such Change in
     Control or (y) the obtaining of knowledge of such Control Event (including
     via the receipt of notice of a Control Event from any holder of Notes), as
     the case may be, give written notice of such Change in Control or Control
     Event to each holder of Notes and, simultaneously with the sending of such
     written notice, give telephonic advice of such Change in Control or Control
     Event to an investment officer or other similar representative or agent of
     each such holder specified on Annex 1 at the telephone number specified
     thereon, or to such other Person at such other telephone number as any
     holder of a Note may specify to the Company in writing.  In the event of a
     Change in Control, such written notice shall contain, and such written
     notice shall constitute, an irrevocable offer to prepay all, but not less
     than all, of the Notes of each Series held by such holder on a date
     specified in such notice (the "CONTROL PREPAYMENT DATE") that is not less
     than thirty (30) days and not more than sixty (60) days after the date of
     such notice.  (If the Control Prepayment Date shall not be specified in
     such notice, the

                                      21
<PAGE>

Control Prepayment Date shall be the thirtieth (30th) day after the date of such
notice.)

    (B)  ACCEPTANCE AND PAYMENT. To accept such offered prepayment, a holder of
Notes shall cause a notice of such acceptance (which notice of acceptance may be
in respect of one or more Series of Notes held by such holder, but which notice
need not treat Notes of all Series held by such holder in the same manner) to be
delivered to the Company not later than fourteen (14) days after the date of
receipt by such holder of the written offer of such prepayment. If so accepted,
such offered prepayment shall be due and payable on the Control Prepayment Date.
Such offered prepayment shall be made at one hundred percent (100%) of the
principal amount of such Notes, together with (i) an amount equal to the Make-
Whole Amount, if any, at the time applicable with respect to the principal
amount of the Notes then being prepaid and (ii) interest on the Notes then being
prepaid accrued to the Control Prepayment Date.

    (C)  OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this
Section 4.3 will be accompanied by an officer's certificate, executed by a
Senior Officer and dated the date of such offer, specifying:

         (I)    the Control Prepayment Date;

         (II)   the principal amount of each Note offered to be prepaid;

         (III)  the interest to be paid on each such Note, accrued to the
    Control Prepayment Date;

         (IV)   the calculation of an estimated Make-Whole Amount, if any
    (assuming the date of prepayment was the date of such notice), due in
    connection with such prepayment, accompanied by a copy of the Applicable
    H.15 used in determining the Make-Whole Discount Rate in respect thereof;

         (V)    that the conditions of this Section 4.3 have been
    fulfilled; and

         (VI)   in reasonable detail, the nature and date or proposed
    date of the Change in Control.

Contemporaneously with any such prepayment the Company shall deliver to each
holder of Notes a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date,
accompanied by a copy of the Applicable H.15 used in determining the Make-Whole
Discount Rate in respect thereof.

                                      22
<PAGE>

    (D) EFFECT OF PREPAYMENTS. Each prepayment of principal of the Notes of any
Series pursuant to this Section 4.3 shall be applied to reduce the principal
amount of the Notes of such Series due on the maturity date of the Notes of such
Series and to reduce each remaining scheduled required prepayment of principal
(if any) applicable to each such Series required by Section 4.2, apportioned on
a ratable basis (based on the principal amount due on each such date) among all
such amounts.

4.4 OPTIONAL PREPAYMENTS.

    (A) OPTIONAL PREPAYMENTS. The Company may at any time after the Closing Date
prepay the principal amount of the Notes, in part, in integral multiples of five
million dollars ($5,000,000), or in whole, in each case together with:

         (I) an amount equal to the Make-Whole Amount at such time in respect of
    the principal amount of the Notes being so prepaid; and

         (II) interest on such principal amount then being prepaid accrued to
    the prepayment date.

    (B) EFFECT OF PREPAYMENTS. Each prepayment of principal of the Notes
pursuant to Section 4.4(a) shall be applied first, to the principal amount of
the Notes of each Series due on the maturity date of the Notes of such Series
and second, to the scheduled required prepayments of principal (if any)
applicable to such Series required by Section 4.2, in the inverse order of the
maturity thereof.

    4.5  NOTICE OF OPTIONAL PREPAYMENT.

    The Company will give notice of any optional prepayment of the Notes to each
holder of the Notes not less than thirty (30) days or more than sixty (60) days
before the date fixed for prepayment, specifying:

         (A) such date;

         (B) that such prepayment is being made pursuant to Section 4.4;

         (C) the principal amount of such holder's Notes to be prepaid on such
    date with respect to each Series of Notes held by such holder;

         (D) the interest to be paid on each such Note, accrued to the date
    fixed for prepayment; and

                                      23
<PAGE>

         (E) the calculation of an estimated Make-Whole Amount, if any (assuming
    the date of prepayment was the date of such notice) due in connection with
    such prepayment with respect to each Series of Notes held by such holder,
    accompanied by a copy of the Applicable H.15 used in determining the Make-
    Whole Discount Rate in respect thereof.

Such notice of prepayment shall also certify all facts that are conditions
precedent to any such prepayment.  Notice of prepayment having been so given,
the aggregate principal amount of the Notes specified in such notice, together
with the Make-Whole Amount, if any, and accrued interest thereon shall become
due and payable on the specified prepayment date.  Contemporaneously with such
prepayment the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date, accompanied by a copy of the Applicable H.15
used in determining the Make-Whole Discount Rate in respect thereof.

    4.6  PRO RATA PAYMENTS.

         (A) SCHEDULED REQUIRED PREPAYMENTS. If, at the time of any required
    prepayment of the principal of Notes of any Series made pursuant to Section
    4.2 there is more than one Note of such Series outstanding, the aggregate
    principal amount of such required prepayment shall be allocated among the
    Notes of such Series at the time outstanding pro rata in proportion to the
    respective unpaid principal amounts of all such outstanding Notes of such
    Series.

         (B) OPTIONAL PREPAYMENTS. If, at the time of any optional prepayment of
    the principal of Notes made pursuant to Section 4.4 there is more than one
    Note outstanding, the aggregate principal amount of such optional prepayment
    shall be allocated among the Notes at the time outstanding pro rata in
    proportion to the respective unpaid principal amounts of all such
    outstanding Notes, without regard to the Series of such Notes.

    4.7  NOTATION OF NOTES ON PREPAYMENT.

    Upon any partial prepayment of a Note, such Note may, at the option of
the holder thereof, be

         (A) surrendered to the Company pursuant to Section 5.2 in exchange for
    a new Note of the same Series, in a principal amount equal to the principal
    amount remaining unpaid on the surrendered Note,

         (B) made available to the Company for notation thereon of the portion
    of the principal so prepaid, or

                                      24
<PAGE>

         (C) marked by such holder with a notation thereon of the portion of the
    principal so prepaid.

In case the entire principal amount of any Note is prepaid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the prepaid principal amount of any Note.

    4.8 NO OTHER OPTIONAL PREPAYMENTS.

    Except as provided in Section 4.4, the Company may not make any optional
prepayment (whether directly or indirectly by purchase or acquisition) in
respect of the Notes.

5.  REGISTRATION; SUBSTITUTION OF NOTES

    5.1 REGISTRATION OF NOTES.

    The Company will cause to be kept at its office, maintained pursuant to
Section 6.3, a register for the registration and transfer of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in the
register. The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes hereof.

    5.2 EXCHANGE OF NOTES.

         (A) Upon surrender of any Note at the office of the Company maintained
    pursuant to Section 6.3 duly endorsed or accompanied by a written instrument
    of transfer duly executed by the registered holder of such Note or its
    attorney duly authorized in writing, the Company will execute and deliver,
    at the Company's expense (except as provided below), new Notes of the same
    Series in exchange therefor, in denominations of at least five hundred
    thousand dollars ($500,000) (except as may be necessary to reflect any
    principal amount not evenly divisible by five hundred thousand dollars
    ($500,000)), in an aggregate principal amount equal to the unpaid principal
    amount of the surrendered Note. Each such new Note shall be payable to such
    Person as such holder may request, shall be of the same Series as the
    surrendered Note and shall be substantially in the form of the Exhibit in
    Exhibit A1 through Exhibit A7 corresponding to the Series of the surrendered
    Note. Each such new Note shall be dated and bear interest from the date to
    which interest shall have been paid on the surrendered Note or dated the
    date of the surrendered Note if no interest shall have been paid thereon.
    The Company may require payment of a sum sufficient to cover any stamp or
    other issuance tax or governmental charge imposed in respect of any such
    transfer of Notes.

                                      25
<PAGE>

         (B) The Company will pay the cost of delivering to or from such
    holder's home office or custodian bank from or to the Company, insured to
    the reasonable satisfaction of such holder, the surrendered Note and any
    Note issued in substitution or replacement for the surrendered Note.

    5.3 REPLACEMENT OF NOTES.

    Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership (or of ownership by such Institutional
Investor's nominee) and such loss, theft, destruction or mutilation), and

         (A) in the case of loss, theft or destruction, of indemnity reasonably
    satisfactory to the Company (provided that if the holder of such Note is an
    Institutional Investor or a nominee of an Institutional Investor, such
    Institutional Investor's own unsecured letter agreement of indemnity shall
    be deemed to be satisfactory for such purpose), or

         (B) in the case of mutilation, upon surrender and cancellation thereof,
    the Company at its own expense will execute and, within five (5) Business
    Days after such receipt, deliver, in lieu thereof, a new Note of the same
    Series, dated and bearing interest from the date to which interest shall
    have been paid on such lost, stolen, destroyed or mutilated Note or dated
    the date of such lost, stolen, destroyed or mutilated Note if no interest
    shall have been paid thereon.

    5.4 ISSUANCE TAXES.

    The Company will pay all taxes (if any) due in connection with the execution
and delivery of this Agreement and in connection with any modification,
amendment or waiver of any Financing Document and shall save each holder of
Notes harmless without limitation as to time against any and all liabilities
with respect to all such taxes. The obligations of the Company under this
Section 5.4 shall survive the payment or prepayment of the Notes and the
termination hereof.

6.  GENERAL COVENANTS

    The Company covenants and agrees that on and after the Closing Date and
thereafter for so long as any of its obligations under the Note Purchase
Agreements and the Notes shall be outstanding:

                                      26
<PAGE>

    6.1 PAYMENT OF TAXES AND CLAIMS.

    The Company shall, and shall cause each Subsidiary to, pay before they
become delinquent,

         (A) all taxes, assessments and governmental charges or levies imposed
    upon it or its Property, and

         (B) all claims or demands of materialmen, mechanics, carriers,
    warehousemen, landlords and other like Persons that, if unpaid, might result
    in the creation of a Lien upon its Property,

provided, that items of the foregoing description need not be paid (x) while
being contested in good faith and by appropriate proceedings diligently pursued
as long as adequate book reserves have been established and maintained and exist
with respect thereto, and (y) so long as the title of the Company or the
Subsidiary, as the case may be, to, and its right to use, such Property, is not
materially adversely affected thereby.

    6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE.

    The Company shall, and shall cause each Subsidiary to,

         (A) PROPERTY -- maintain its Property in good condition, ordinary wear
    and tear excepted, and make all necessary renewals, replacements, additions,
    betterments and improvements thereto, and, in addition to the foregoing, the
    Guarantors shall collectively, during each year, either expend or invest an
    aggregate amount equal to at least fifty percent (50%) of Depreciation
    determined for the then most recently ended fiscal year of the Company on
    repairs, maintenance or capital improvements to the "Improvements" (as such
    term is defined in the Deeds of Trust);

         (B) INSURANCE -- maintain, with financially sound and reputable
    insurers accorded a rating by A.M. Best Company of "A" or better and a size
    rating of "XII" or better (or comparable ratings by any comparable successor
    rating agency), insurance (including, without limitation, the insurance
    required by the Security Documents) with respect to its Property and
    business against such casualties and contingencies, of such types
    (including, without limitation, insurance with respect to losses arising out
    of Property loss or damage, public liability, business interruption,
    larceny, workers' compensation, embezzlement or other criminal
    misappropriation) and in such amounts as is customary in the case of
    corporations of established reputations engaged in the same or a similar
    business and similarly situated; provided that the Company and the
    Subsidiaries may maintain one or more systems of self-insurance if adequate
    reserves are maintained with respect thereto and if such systems are
    implemented and operated in a manner consistent with the sound financial
    practices of similarly situated corporations of established reputations that
    maintain similar systems of self-insurance;

                                      27
<PAGE>

         (C) FINANCIAL RECORDS -- maintain sound accounting policies and an
    adequate and effective system of accounts and internal accounting controls
    that will safeguard assets, properly record income, expenses and liabilities
    and assure the production of proper financial statements in accordance with
    GAAP;

         (D) CORPORATE EXISTENCE AND RIGHTS -- do or cause to be done all things
    necessary

              (I)   to preserve and keep in full force and effect its existence,
         rights and franchises,

              (II)  to ensure that the Company legally and beneficially owns
         eighty-six percent (86%) of the capital stock of each class of Brown's
         and one hundred percent (100%) of the capital stock of each of the
         other Guarantors, and

              (III) to maintain each Subsidiary as a Subsidiary, except as
         otherwise permitted by Section 6.14 and Section 6.15(b); and

         (E) COMPLIANCE WITH LAW -- not be in violation of any law, ordinance or
    governmental rule or regulation to which it is subject (including, without
    limitation, any Environmental Protection Law) and not fail to obtain any
    license, permit, franchise or other governmental authorization necessary to
    the ownership of its Properties or to the conduct of its business if such
    violation or failure to obtain could be reasonably expected to have a
    Material Adverse Effect.

    6.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.

    The Company shall punctually pay, or cause to be paid, the principal of and
interest (and Make-Whole Amount, if any) to become due in respect of, the Notes,
as and when the same shall become due according to the terms hereof and of the
Notes, and shall maintain an office at the address of the Company set forth in
Section 10.1 where notices, presentations and demands in respect hereof and of
the Notes may be made upon it. Such office shall be maintained at such address
until such time as the Company shall notify the holders of the Notes of any
change of location of such office, which shall in any event be located within
the United States of America.

    6.4 CURRENT RATIO.

    The Company shall not at any time permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.05 to 1.00.

                                      28
<PAGE>

    6.5 CONSOLIDATED WORKING CAPITAL.

    The Company shall not at any time permit Consolidated Working Capital to be
less than Thirty-Five Million Dollars ($35,000,000).

    6.6 FUNDED DEBT.

    The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, create, assume, incur or Guaranty or otherwise become or be liable
in respect of any Funded Debt other than:

         (A) Funded Debt represented by the Notes;

         (B) Funded Debt outstanding on the Closing Date and described on Part
    2.2(b) of Annex 2;

         (C) Funded Debt of a Wholly-Owned Subsidiary to the Company or to any
    other Wholly-Owned Subsidiary;

         (D) Funded Debt of the Company to a Wholly-Owned Subsidiary; and

         (E) additional Funded Debt of the Company and the Subsidiaries if,
    after giving effect thereto and to any concurrent application of the
    proceeds of such Funded Debt, (i) Consolidated Funded Debt would not exceed
    sixty-five percent (65%) of Consolidated Total Capitalization and (ii)
    Consolidated Senior Funded Debt would not exceed fifty-five percent (55%) of
    the result of (A) Consolidated Total Capitalization minus (B) Senior
    Subordinated Debt.

    6.7 MAINTENANCE OF FUNDED DEBT.

         (A) CONSOLIDATED FUNDED DEBT. The Company shall not permit Consolidated
    Funded Debt, determined as of the end of each fiscal quarter of the Company,
    to exceed four hundred percent (400%) of Consolidated EBITDA for the period
    of four (4) consecutive fiscal quarters of the Company ended at such time.

         (B) CONSOLIDATED SENIOR FUNDED DEBT. The Company shall not permit
    Consolidated Senior Funded Debt, determined as of the end of each fiscal
    quarter of the Company, to exceed three hundred twenty percent (320%) of
    Consolidated EBITDA for the period of four (4) consecutive fiscal quarters
    of the Company ended at such time.

         6.8 FIXED CHARGES COVERAGE.

    The Company shall not at any time permit the ratio of Consolidated Net
Income Available for Fixed Charges (calculated in respect of the period of eight
(8) consecutive fiscal quarters of the Company then most recently ended) to

                                      29
<PAGE>

Consolidated Fixed Charges (calculated in respect of such period) to be less
than 1.50 to 1.00.

    6.9 RESTRICTIONS ON DIVIDENDS, ETC.

    The Company shall not, and shall not permit any Subsidiary to, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance (other than statutory, regulatory or common law restrictions) on the
right or power of any Subsidiary to

         (A) pay dividends or make any other distributions on such Subsidiary's
    stock to the Company or any Subsidiary,

         (B) pay any indebtedness owed by such Subsidiary to the Company or any
    Subsidiary,

         (C) make loans or pay advances to the Company or any Subsidiary, or

         (D) transfer any of its Property to the Company or any Guarantor;

provided, however, that a Subsidiary may be subject to restrictions on the
payment of dividends or the making of other distributions on its stock to the
Company or the other Subsidiaries so long as such restrictions permit the
payment of such dividends and the making of such other distributions that are
necessary in order to make any and all payments due (including, without
limitation, any and all amounts due by way of acceleration, required or optional
prepayment or otherwise) in connection with the Notes, the Note Purchase
Agreements and the other Financing Documents, and any and all indebtedness used
to refinance or repay such indebtedness (without increase as to principal amount
or interest rate of such refinancing indebtedness).

    6.10 CONSOLIDATED TANGIBLE NET WORTH.

    The Company shall not at any time permit Consolidated Tangible Net Worth,
determined at such time, to be less than the sum of

         (A) four hundred fifty million dollars ($450,000,000), plus

         (B) the sum of the Company Fiscal Year Net Worth Increase Amounts
    calculated for all fiscal years of the Company ended on or after the date of
    this Agreement.

    6.11 INTENTIONALLY LEFT BLANK.

                                      30
<PAGE>

    6.12 RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.

         (A) LIMITATION ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. The
    Company shall not, and shall not permit any Subsidiary to, at any time
    declare or make or incur any liability to declare or make any Restricted
    Payment (other than Restricted Payments comprised solely of Distributions to
    the Company or a Wholly-Owned Subsidiary in respect of the capital stock of
    a Subsidiary ("PERMITTED DISTRIBUTIONS")) or make or authorize any
    Restricted Investment, unless

              (I) immediately after giving effect to the proposed Restricted
         Payment or Restricted Investment, the aggregate amount of all
         Restricted Payments (other than Permitted Distributions) and Restricted
         Investments in each case made or authorized after February 1, 2000 does
         not exceed the sum of

                   (A) one hundred million dollars ($100,000,000); plus

                   (B) fifty percent (50%) of the aggregate Consolidated Net
              Income (or, in case such aggregate Consolidated Net Income shall
              be a deficit, minus one hundred percent (100%) of such deficit)
              for the period commencing on February 1, 2000 and ending on the
              date of such proposed transaction; plus

                   (C) one hundred percent (100%) of the aggregate net cash
              proceeds received by the Company after the Closing Date from the
              issuance or sale of shares of capital stock of the Company (other
              than Mandatorily Redeemable Stock); plus

                   (D) the market value of (but in any event not exceeding the
              Fair Market Value of the assets or stock acquired with) the shares
              of capital stock issued by the Company in payment for the stock or
              assets of any Person acquired by the Company or any Subsidiary
              after the Closing Date in an arm's-length transaction;

              (II) immediately prior to, and immediately after giving effect to
         the proposed Restricted Payment or Restricted Investment, the Company
         would be permitted by Section 6.6(e)(i) and Section 6.6(e)(ii) to incur
         at least one dollar ($1.00) of additional Funded Debt owed to a Person
         other than a Subsidiary; and

              (III) immediately prior to, and immediately after giving effect
         to, the proposed Restricted Payment or Restricted Investment, no
         Default or Event of Default exists or would exist.

                                      31
<PAGE>

         (B) TIME OF PAYMENT OF DISTRIBUTIONS. The Company shall not, and shall
    not permit any Subsidiary to, authorize a Distribution on its capital stock
    that is not payable within sixty (60) days of authorization.

         (C) SUBSIDIARIES. Each corporation that becomes a Subsidiary after the
    Closing Date shall be deemed to have made, at the time it becomes a
    Subsidiary, all Restricted Investments of such corporation existing
    immediately after it becomes a Subsidiary.

    6.13 LIENS.

         (A) NEGATIVE PLEDGE. The Company shall not, and shall not permit any
    Subsidiary to, cause or permit, or agree or consent to cause or permit in
    the future (upon the happening of a contingency or otherwise), any of their
    Property, whether now owned or hereafter acquired, to be subject to a Lien
    except:

              (I) Liens securing taxes, assessments or governmental charges or
         levies or the claims or demands of materialmen, mechanics, carriers,
         warehousemen, landlords and other like Persons, provided that the
         payment thereof is not at the time required by Section 6.1 or by any
         provision of the other Financing Documents;

              (II) Liens incurred or deposits made in the ordinary course of
         business

                   (A) in connection with workers' compensation, unemployment
              insurance, social security and other like laws, and

                   (B) to secure the performance of letters of credit, bids,
              tenders, sales contracts, leases, statutory obligations, surety
              and performance bonds (of a type other than set forth in Section
              6.13(a)(iii)) and other similar obligations not incurred in
              connection with the borrowing of money, the obtaining of advances
              or the payment of the deferred purchase price of Property;

              (III) Liens

                   (A) arising from judicial attachments and judgments,

                   (B) securing appeal bonds, supersedeas bonds, or

                                      32
<PAGE>

                   (C) arising in connection with court proceedings (including,
              without limitation, surety bonds and letters of credit or any
              other instrument serving a similar purpose),

         provided that the execution or other enforcement of such Liens is
         effectively stayed and the claims secured thereby are being actively
         contested in good faith and by appropriate proceedings, and provided
         further that the aggregate amount so secured shall not at any time
         exceed one million dollars ($1,000,000);

              (IV) Liens in the nature of reservations, exceptions,
         encroachments, easements, rights-of-way, covenants, conditions,
         restrictions, leases and other similar title exceptions or encumbrances
         affecting real Property, provided that such exceptions and encumbrances
         do not in the aggregate materially detract from the value of such
         Properties or materially interfere with the use of such Properties in
         the ordinary conduct of the owning Person's business;

              (V) (A) Liens (of a type other than set forth in Section
              6.13(a)(ix)) in existence on the Closing Date, more specifically
              described on Part 6.13(a)(v) of Annex 2; and

                   (B) Liens securing renewals, extensions and refinancings of
              Debt secured by the Liens permitted by clause (A) immediately
              above, provided that the amount of Debt secured by each such Lien
              is not increased in excess of the amount of Debt outstanding on
              the date such Lien was originally created, and none of such Liens
              is extended to include any additional Property of the Company or
              any Subsidiary;

              (VI) on or prior to the Collateral Release Date, Liens on the
         Collateral

                   (A) in favor of the Security Trustee for the benefit of the
              holders of the Notes that secure obligations under any of the
              Financing Documents, and

                   (B) constituting Permitted Exceptions;

              (VII) on or prior to the Collateral Release Date, Liens on
         Property other than the Collateral securing Funded Debt (other than
         Bank Funded Debt) incurred and permitted to exist in accordance with
         the provisions of Sections 6.6 and 6.7;

                                      33
<PAGE>

              (VIII) Purchase Money Liens, if, after giving effect thereto and
         to any concurrent transactions:

                   (A) each such Purchase Money Lien secures Debt in an amount
              not exceeding the cost of acquisition or construction of the
              particular Property to which such Debt relates; and

                   (B) no Default or Event of Default would exist;

              (IX) on or prior to the Collateral Release Date, Liens on Property
         of the Subsidiaries primarily constituting inventory or accounts that
         secure obligations arising under Revolving Credit Agreements of the
         Company or any Subsidiary; and

              (X) after the Collateral Release Date, Liens securing Debt of the
         Company or any Subsidiary, provided that at the time of the incurrence
         thereof and after giving effect thereto and to the concurrent
         retirement of any other Debt,

                   (A) the aggregate outstanding principal amount of all Debt of
              the Company and the Subsidiaries secured by Liens (including,
              without limitation, Liens permitted by Section 6.13(a)(v) and
              Section 6.13(a)(viii)) would not exceed fifteen percent (15%) of
              Consolidated Tangible Net Worth, determined at such time; and

                   (B) no Default or Event of Default would exist.

         (B) COLLATERAL. Nothing in this Section 6.13 shall be deemed to permit
    the Company or any Guarantor to cause or permit, or agree or consent to
    cause or permit in the future (upon the happening of a contingency or
    otherwise), any of the Collateral, whether now owned or hereafter acquired,
    to be subject to a Lien in violation of the terms of the Security Documents.

         (C) STOCK. Notwithstanding anything to the contrary in Section 6.13(a),
    the Company shall not, and shall not permit any Subsidiary to cause or
    permit, or agree or consent to cause or permit in the future (upon the
    happening of a contingency or otherwise), any of the capital stock of any
    Subsidiary, whether now owned or hereafter acquired, to be subject to a
    Lien.

         (D) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any Property not
    otherwise the subject of a prior perfected Lien in favor of the Security
    Trustee shall be subjected to a Lien in violation of this Section 6.13, the
    Company shall forthwith make or cause to be made, to the

                                      34
<PAGE>

    fullest extent permitted by applicable law, provision whereby the Notes
    shall be secured equally and ratably with all other obligations secured
    thereby pursuant to such agreements and instruments as shall be approved by
    the Required Holders, and the Company shall cause to be delivered to each
    holder of a Note an opinion of independent counsel to the effect that such
    agreements and instruments are enforceable in accordance with their terms,
    and in any such case the Notes shall have the benefit, to the full extent
    that, and with such priority as, the holders may be entitled thereto under
    applicable law, of an equitable Lien on such Property securing the Notes.
    Such violation of this Section 6.13 shall constitute an Event of Default
    hereunder, whether or not any such provision is made pursuant to this
    Section 6.13(d).

         (E) FINANCING STATEMENTS. The Company shall not, and shall not permit
    any Subsidiary to, sign or file a financing statement under the Uniform
    Commercial Code of any jurisdiction that names the Company or such
    Subsidiary as debtor, or sign any security agreement authorizing any secured
    party thereunder to file any such financing statement, except, in any such
    case, a financing statement filed or to be filed to perfect or protect a
    security interest that the Company or such Subsidiary is entitled to create,
    assume or incur, or permit to exist, under the foregoing provisions of this
    Section 6.13 or to evidence for informational purposes a lessor's interest
    in Property leased to the Company or any such Subsidiary.

    6.14 MERGER; ACQUISITION.

         (A) MERGER AND CONSOLIDATION. The Company shall not, and shall not
    permit any Subsidiary to, merge with or into, consolidate with, or sell,
    lease as lessor, transfer or otherwise dispose of all or substantially all
    of its Property to, any other Person or permit any other Person to merge
    with or into or consolidate with it (except that a Subsidiary other than a
    Guarantor may merge into, consolidate with, or sell, lease, transfer or
    otherwise dispose of all or substantially all of its assets to, the Company
    or a Wholly-Owned Subsidiary other than a Guarantor); provided that the
    foregoing restriction does not apply to the merger or consolidation of the
    Company with or into, or the sale, lease, transfer or other disposition by
    the Company of all or substantially all of its Property to, another
    corporation, if:

              (I) the corporation that results from such merger or consolidation
         or that purchases, leases, or acquires all or substantially all of such
         Property (the "SURVIVING CORPORATION") is organized under the laws of,
         and has substantially all of its Property located in, the United States
         of America or any jurisdiction thereof;

                                      35
<PAGE>

              (II) the due and punctual payment of the principal of and Make-
         Whole Amount, if any, and interest on all of the Notes, according to
         their tenor, and the due and punctual performance and observance of all
         the covenants herein and in the other Financing Documents to be
         performed and observed by the Company, are expressly assumed by the
         Surviving Corporation pursuant to such agreements or instruments as
         shall be satisfactory to the Required Holders, and the Company shall
         cause to be delivered to each holder of Notes an opinion of independent
         counsel (which opinion and counsel are satisfactory to the Required
         Holders) to the effect that such agreements and instruments are
         enforceable in accordance with their terms;

              (III) immediately prior to, and immediately after the consummation
         of such transaction, and after giving effect thereto, the Company would
         be permitted by Section 6.6(e)(i) and Section 6.6(e)(ii) to incur at
         least one dollar ($1.00) of additional Funded Debt owed to a Person
         other than a Subsidiary; and

              (IV) immediately prior to, and immediately after the consummation
         of such transaction, and after giving effect thereto, no Default or
         Event of Default exists or would exist.

         (B) ACQUISITION OF STOCK. The Company shall not, and shall not permit
    any Subsidiary to, acquire any stock of any corporation if upon completion
    of such acquisition such corporation would be a Subsidiary, or acquire all
    of the assets of, or such of the assets as would permit the transferee to
    continue any one or more integral business operations of, any Person unless,
    immediately after the consummation of such acquisition, and after giving
    effect thereto, no Default or Event of Default exists or would exist under
    any provision hereof.

    6.15 TRANSFERS OF PROPERTY; SUBSIDIARY STOCK.

         (A) TRANSFERS OF PROPERTY. The Company shall not, and shall not permit
    any Subsidiary to, sell (including, without limitation, any sale and
    subsequent leasing as lessee of such Property), lease as lessor, transfer,
    or otherwise dispose of any Property (individually, a "TRANSFER" and
    collectively, "TRANSFERS"), except

              (I) Transfers of inventory, obsolete or worn-out Property or
         excess equipment no longer useful in the business of the Company or
         such Subsidiary, in each case in the ordinary course of business of the
         Company or such Subsidiary;

              (II) Transfers from a Subsidiary to the Company or to any
         Guarantor and Transfers from the Company to any Guarantor; and

                                      36
<PAGE>

              (III) any other Transfer (including a Transfer of Property to any
         Person and the concurrent rental or lease of such transferred Property
         from such Person) at any time of any Property to a Person, other than
         an Affiliate, for an Acceptable Consideration, if each of the following
         conditions would be satisfied with respect to such Transfer:

                   (A) the sum of

                       (I) the current book value of such Property, plus

                       (II) the aggregate book value of all other Property of
                   the Company and the Subsidiaries Transferred (other than in
                   Transfers referred to in the foregoing clause (i) and clause
                   (ii) (collectively, "EXCLUDED TRANSFERS")) during the period
                   beginning on the first day of the then current fiscal year of
                   the Company and ended immediately prior to the date of such
                   Transfer,

              would not exceed ten percent (10%) of Consolidated Total Assets
              determined as at the end of the most recently ended fiscal year of
              the Company prior to giving effect to such Transfer,

                   (B) the sum of

                       (I) the current book value of such Property, plus

                       (II) the aggregate book value of all other Property of
                   the Company and the Subsidiaries Transferred (other than in
                   Excluded Transfers) during the period commencing on July 31,
                   1996 and ended at the time of such Transfer,

              would not exceed twenty percent (20%) of Consolidated Total Assets
              determined as at the end of the most recently ended fiscal year of
              the Company prior to giving effect to such Transfer, and

                   (C) immediately prior to, and immediately after the
              consummation of such transaction, and after giving effect thereto,
              no Default or Event of Default exists or would exist,

                                      37
<PAGE>

              provided, that all or any portion of the assets which are the
              subject of any Transfer of Property shall be excluded for purposes
              of clause (A) and clause (B) of this Section 6.15(a)(iii) if,
              within three hundred sixty (360) days after such Transfer, the
              entire proceeds of such Transfer (net of ordinary and reasonable
              transaction costs and expenses incurred in connection with such
              Transfer) are applied by the Company or such Subsidiary to:

                   (y) the purchase of operating assets of the Company or any
              Subsidiary reasonably equal in value to the Property which is the
              subject of such Transfer, so long as each such investment shall
              not have been included in the calculation of any other exclusion
              of any other Transfer proposed to be excluded from the operation
              of clause (A) or clause (B) of this Section 6.15(a)(iii), or

                   (z) an optional prepayment of Notes pursuant to Section 4.4.

    Notwithstanding anything to the contrary contained herein, the Company shall
    not, and shall not permit any Subsidiary to, sell, lease as lessor, transfer
    or otherwise dispose of any of the Collateral except as expressly permitted
    by Section 6.15(c). Nothing in this Section 6.15(a) shall be deemed to
    permit the Company or any Subsidiary to violate any provisions of Section
    6.16.

         (B) TRANSFERS OF SUBSIDIARY STOCK. The Company shall not, and shall not
    permit any Subsidiary to, Transfer any shares of the capital stock (or any
    warrants, rights or options to purchase stock or other Securities
    exchangeable for or convertible into capital stock) of a Subsidiary (such
    capital stock, warrants, rights, options and other Securities herein called
    "SUBSIDIARY STOCK"), nor shall any Subsidiary issue, sell or otherwise
    dispose of any shares of its own Subsidiary Stock, provided that the
    foregoing restrictions do not apply to:

              (I) the issuance by a Subsidiary of shares of its own Subsidiary
         Stock to the Company or a Wholly-Owned Subsidiary;

              (II) Transfers by the Company or a Subsidiary of shares of
         Subsidiary Stock to the Company or a Wholly-Owned Subsidiary;

              (III) the issuance by a Subsidiary of directors' qualifying
         shares; and

              (IV) the Transfer of all of the Subsidiary Stock of a Subsidiary
         owned by the Company and the other Subsidiaries if

                                      38
<PAGE>

                   (A) such Transfer satisfies the requirements of Section
              6.15(a)(iii);

                   (B) in connection with such Transfer the entire investment
              (whether represented by stock, Debt, claims or otherwise) of the
              Company and the other Subsidiaries in such Subsidiary is
              Transferred to a Person other than the Company or a Subsidiary not
              simultaneously being disposed of;

                   (C) the Subsidiary being disposed of has no continuing
              investment in any other Subsidiary not simultaneously being
              disposed of or in the Company; and

                   (D) immediately prior to, and immediately after the
              consummation of such Transfer, and after giving effect thereto, no
              Default or Event of Default exists or would exist.

         For purposes of determining the book value of Property constituting
         Subsidiary Stock being Transferred as provided in clause (iv) above,
         such book value shall be deemed to be the aggregate book value of all
         assets of the Subsidiary that shall have issued such Subsidiary Stock.

    Nothing in this Section 6.15(b) shall be deemed to permit the Company or any
    Subsidiary to (x) sell any shares of capital stock of any Subsidiary in
    violation of Section 6.2(d)(ii) or (y) violate any of the provisions of
    Section 6.16.

         (C) TRANSFERS OF COLLATERAL. The Company shall not, and shall not
    permit any Subsidiary to, sell or otherwise Transfer any Property
    constituting Collateral, except Transfers for an Acceptable Consideration of
    obsolete or worn-out equipment constituting Collateral, or excess equipment
    constituting Collateral, in each case that is no longer useful in the
    business of the Company or such Subsidiary, if each of the following
    conditions would be satisfied with respect to such Transfer:

              (I) the sum of

                   (A) the current book value of such Property, plus

                   (B) the aggregate book value of all other Property of the
              Company and the Subsidiaries Transferred pursuant to this Section
              6.15(c) during the period beginning on the first day of the then
              current fiscal year of the Company and ended immediately prior to
              the date of such Transfer,

                                      39
<PAGE>

              would not exceed five million dollars ($5,000,000),

              (II) the sum of

                   (A) the current book value of such Property, plus

                   (B) the aggregate book value of all other Property of the
              Company and the Subsidiaries Transferred pursuant to this Section
              6.15(c) during the period commencing on July 31, 1996 and ended at
              the time of such Transfer,

              would not exceed twenty million dollars ($20,000,000) and

              (III) immediately prior to, and immediately after the consummation
         of such transaction, and after giving effect thereto, no Default or
         Event of Default exists or would exist,

    provided, that all or any portion of the assets which are the subject of any
    Transfer of Property shall be excluded for purposes of clause (i) and clause
    (ii) of this Section 6.15(c) if, within three hundred sixty (360) days after
    such Transfer, the entire proceeds of such Transfer (net of ordinary and
    reasonable transaction costs and expenses incurred in connection with such
    Transfer) are applied by the Company or such Subsidiary to:

                   (y) the purchase of Property of the Company or any Subsidiary
              reasonably equal in value or use to the Property which is the
              subject of such Transfer, so long as (1) such Property is subject
              to a perfected first-priority security interest in favor of the
              Security Trustee for the benefit of the holders from time to time
              of the Notes, (2) such Property constitutes Collateral and (3)
              each such investment shall not have been included in the
              calculation of any other exclusion of any other Transfer proposed
              to be excluded from the operation of clause (i) or clause (ii) of
              this Section 6.15(c), or

                   (z) an optional prepayment of Notes pursuant to Section 4.4.

    The Company acknowledges and agrees that until applied pursuant to this
    Section 6.15(c), the net proceeds of any such Transfer of Collateral by the
    Company or any Subsidiary shall be held in trust by the Security Trustee
    pursuant to the terms of the Security Documents.

    6.16 TRADEMARK SUBSIDIARIES.

         (A) GENERALLY. The Company shall not, and shall not permit any
    Subsidiary other than a Trademark Subsidiary to, own any patents,

                                      40
<PAGE>

    trademarks, service marks, trade names, copyrights and other similar
    licenses and intangibles used or useful in the conduct of the business of
    the Company or any Subsidiary.

         (B) OWNERSHIP OF TRADEMARK SUBSIDIARIES. The Company (i) shall, at all
    times, maintain each Trademark Subsidiary as a Wholly-Owned Subsidiary and
    (ii) shall not permit any of the capital stock of any Trademark Subsidiary
    to be subject to a Lien.

         (C) NO SALE OR MERGER. The Company shall not permit any Trademark
    Subsidiary to merge with or into, consolidate with, or sell, lease, transfer
    or otherwise dispose of all or substantially all of its Property to, any
    other Person other than another Trademark Subsidiary, or permit any other
    Person other than a Trademark Subsidiary to merge with or into or
    consolidate with it. The Company shall not permit any Trademark Subsidiary
    to sell, lease as lessor, license as licensor, transfer or otherwise dispose
    of any patents, trademarks, service marks, trade names, copyrights and
    licenses.

         (D) NO DEBT OR LIENS. The Company shall not permit any Trademark
    Subsidiary to cause or permit, or agree or consent to cause or permit in the
    future (upon the happening of a contingency or otherwise), any of its
    Property, whether now owned or hereafter acquired, to be subject to a Lien.
    The Company shall not at any time permit any Trademark Subsidiary to be or
    become liable for any Debt or to issue any Mandatorily Redeemable Stock.

    6.17 ENVIRONMENTAL COMPLIANCE.

         (A) COMPLIANCE. The Company shall, and shall cause each Subsidiary to,
    comply with all Environmental Protection Laws in effect in each jurisdiction
    where it is doing business and where the failure to comply with which,
    individually or in the aggregate, could reasonably be expected to have a
    Material Adverse Effect.

         (B) LIABILITY. The Company shall not, and shall not permit any
    Subsidiary to, permit itself to be subject to any liability under any
    Environmental Protection Laws that, individually or in the aggregate, could
    reasonably be expected to have a Material Adverse Effect.

         (C) MORRELL. The Company shall cause Morrell to use its best efforts to
    comply with all reasonable environmental testing, hazard prevention and
    remediation recommendations of its environmental consultants with respect to
    the real Property of Morrell identified in the Morrell Mortgage.

                                      41
<PAGE>

    6.18 LINE OF BUSINESS.

    The Company shall not, and shall not permit any Subsidiary to, engage in any
business other than businesses engaged in by the Company and the Subsidiaries on
the Closing Date.

    6.19 TRANSACTIONS WITH AFFILIATES.

    The Company shall not, and shall not permit any Subsidiary to, enter into
any transaction, including, without limitation, the purchase, sale or exchange
of Property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.

    6.20 TAX CONSOLIDATION.

    The Company shall not file or consent to the filing of a consolidated tax
return with any Person other than a Subsidiary, or permit the filing of any
consolidated tax return by any Subsidiary with any Person other than the Company
or another Subsidiary.

    6.21 ERISA.

         (A) COMPLIANCE. The Company shall, and shall cause each ERISA Affiliate
    to, at all times with respect to each Pension Plan,

              (I) make timely payment of contributions required

                   (A) to meet the minimum funding standard set forth in ERISA
              or the IRC with respect thereto, or

                   (B) to be paid as provided for by section 515 of ERISA, and

              (II) comply with all other applicable provisions of ERISA.

         (B) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS.

              (I) The Company shall not at any time permit the present value of
         all employee benefits vested under all Morrell Pension Plans to exceed
         the assets of such Morrell Pension Plans allocable to such vested
         benefits at such time by more than fifty-five million dollars
         ($55,000,000), in each case determined pursuant to Section 6.21(c).

              (II) The Company shall not at any time permit the present value of
         all employee benefits vested under all Pension Plans other

                                      42
<PAGE>

         than Morrell Pension Plans to exceed the assets of all such Pension
         Plans other than Morrell Pension Plans allocable to such vested
         benefits at such time by more than five percent (5%) of Consolidated
         Total Liabilities, in each case determined pursuant to Section 6.21(c).

         (C) VALUATIONS. All assumptions and methods used to determine the
    actuarial valuation of vested employee benefits under Pension Plans and the
    present value of assets of Pension Plans shall be reasonable in the good
    faith judgment of the Company and shall comply with all requirements of law.

         (D) PROHIBITED ACTIONS. The Company shall not, and shall not permit any
    ERISA Affiliate to:

              (I) engage in any "prohibited transaction" (as such term is
         defined in section 406 of ERISA or section 4975 of the IRC) or
         "reportable event" (as such term is defined in section 4043 of ERISA)
         that would result in the imposition of a material tax or penalty;

              (II) incur with respect to any Pension Plan any "accumulated
         funding deficiency" (as such term is defined in section 302 of ERISA),
         whether or not waived;

              (III) terminate any Pension Plan in a manner that could result in

                   (A) the imposition of a Lien on the Property of the Company
              or any Subsidiary pursuant to section 4068 of ERISA or

                   (B) the creation of any liability under section 4062 of
              ERISA;

              (IV) fail to make any payment required by section 515 of ERISA; or

              (V) be an "employer" (as such term is defined in section 3 of
         ERISA) required to contribute to any Multiemployer Plan or a
         "substantial employer" (as such term is defined in section 4001 of
         ERISA) required to contribute to any Multiple Employer Pension Plan if,
         at such time, it could reasonably be expected that the Company or any
         Subsidiary will incur withdrawal liability in respect of such
         Multiemployer Plan and such liability, if incurred, together with the
         aggregate amount of all other withdrawal liability as to which there is
         a reasonable expectation of incurrence by the

                                      43
<PAGE>

         Company or any Subsidiary under any one or more Multiemployer Plans,
         could reasonably be expected to have a Material Adverse Effect.

         (E) FOREIGN PENSION PLANS. To the extent that the Company or any
    Subsidiary is subject to any requirements of any Foreign Pension Plan, the
    Company shall, and shall cause each such Subsidiary to, comply with such
    requirements if the failure to so comply would have, either individually or
    in the aggregate, a Material Adverse Effect.

    6.22 GUARANTIES.

         (A) The Company shall not, and shall not permit any Subsidiary to, be
    or become liable in respect of any Guaranty except

              (I) Guaranties of Debt which constitutes a part of Consolidated
         Funded Debt;

              (II) Guaranties of obligations incurred in the ordinary course of
         business of the Company and the Subsidiaries;

              (III) Guaranties of liabilities which constitute a part of
         Consolidated Current Liabilities (including, without limitation,
         Guaranties of obligations of the Company and the Subsidiaries under
         Revolving Credit Agreements to the extent such Guaranties are not
         permitted by clause (i) above); and

              (IV) Guaranties of amounts payable with respect to Operating
         Rentals constituting a portion of Consolidated Fixed Charges.

         (B) Notwithstanding the provisions of clause (a) above, the Company
    shall not permit any Subsidiary to

              (I) be or become liable for any Guaranty of Debt of the Company,
         any other Subsidiary or any Affiliate, or

              (II) issue any Mandatorily Redeemable Stock,

    in each case unless such Subsidiary enters into an enforceable and
    unconditional Guaranty of the obligations of the Company under the Notes,
    upon terms and conditions satisfactory to the Required Holders.
    Notwithstanding the foregoing, in no event shall the Company or any
    Subsidiary be or become liable in respect of any Guaranty if the
    indebtedness or other liabilities that are the subject of such Guaranty
    would not be permitted pursuant to Section 6.6 or Section 6.7.

                                      44
<PAGE>

    6.23 PRIVATE OFFERING.

    The Company shall not, and shall not permit any Subsidiary or any Person
acting on its behalf to, offer the Notes or any part thereof or any similar
Securities for issuance or sale to, or solicit any offer to acquire any of the
same from, any Person so as to bring the issuance and sale of the Notes within
the provisions of section 5 of the Securities Act.

    6.24 COVENANTS REGARDING THE BLADEN COUNTY COGENERATION PROPERTY.

    The Company covenants and agrees that, in the event the Company or any
Affiliate shall acquire all or any portion of the Bladen County Cogeneration
Property pursuant to the Bladen County Option Documents or otherwise, the
Company shall, simultaneously with such acquisition, cause the Bladen County
Cogeneration Property (or the Portion thereof) so acquired to be pledged as
additional collateral security for the indebtedness evidenced by the Notes
pursuant to documentation and in a manner that is in all respects satisfactory
to the Required Holders. The Company shall pay any and all fees, costs and
expenses including, without limitation, legal fees and expenses and title
insurance charges and premiums, incurred by the holders of the Notes, the
Security Trustee and the other parties to such transaction.

    The Company further covenants and agrees that it shall not, directly or
indirectly, terminate, modify or amend any of the Bladen County Option
Documents, without the prior written consent of the Required Holders.

7.  INFORMATION AS TO COMPANY AND THE GUARANTORS

    7.1 FINANCIAL AND BUSINESS INFORMATION.

    The Company shall deliver to each holder of Notes:

         (A) COMPANY QUARTERLY STATEMENTS -- as soon as practicable after the
    end of each quarterly fiscal period in each fiscal year of the Company
    (other than the last quarterly fiscal period of each such fiscal year), and
    in any event within forty-five (45) days thereafter, duplicate copies of:

              (I) consolidated and consolidating balance sheets of the Company
         and its consolidated subsidiaries, and of the Company and the
         Subsidiaries, as at the end of such quarter, and

              (II) consolidated and consolidating statements of income and cash
         flows of the Company and its consolidated subsidiaries, and of the
         Company and the Subsidiaries, for such quarter and (in

                                      45
<PAGE>

         the case of the second and third quarters) for the portion of the
         fiscal year endingwith such quarter,

    setting forth in each case in comparative form the figures for the
    corresponding periods in the previous fiscal year, all in reasonable detail,
    prepared in accordance with GAAP applicable to quarterly financial
    statements generally, and certified as complete and correct, subject to
    changes resulting from year-end adjustments, by a Senior Financial Officer,
    accompanied by the certificate required by Section 7.2;

         (B) COMPANY ANNUAL STATEMENTS -- as soon as practicable after the end
    of each fiscal year of the Company, and in any event within ninety (90)
    days thereafter, duplicate copies of:

              (I) a consolidated balance sheet of the Company and its
         consolidated subsidiaries, and a consolidating balance sheet of the
         Company and each Guarantor, as at the end of such year, and

              (II) consolidated statements of income, changes in shareholders'
         equity and cash flows of the Company and its consolidated subsidiaries,
         and consolidating statements of income and cash flows of the Company
         and each Guarantor, for such year,

    setting forth in each case in comparative form the figures for the
    immediately preceding fiscal year, all in reasonable detail, prepared in
    accordance with GAAP, and accompanied by

                   (A) in the case of such consolidated financial statements, an
              audit report thereon of independent certified public accountants
              of recognized national standing, which opinion shall state,
              without qualification, that such financial statements present
              fairly, in all material respects, the consolidated financial
              position of the companies being reported upon and their
              consolidated results of operations and cash flows and have been
              prepared in conformity with GAAP, and that the examination of such
              accountants in connection with such financial statements has been
              made in accordance with generally accepted auditing standards, and
              that such audit provides a reasonable basis for such opinion in
              the circumstances,

                   (B) a certification by a Senior Financial Officer that such
              consolidated statements are complete and correct, and

                   (C) the certificates required by Section 7.2 and Section
              7.3;

                                      46
<PAGE>

         (C) AUDIT REPORTS -- promptly upon receipt thereof, a copy of each
    other report submitted to the Company or any Subsidiary by independent
    accountants in connection with any management report, special audit report
    or comparable analysis prepared by them with respect to the books of the
    Company or any Subsidiary;

         (D) SEC AND OTHER REPORTS -- promptly upon their becoming available, a
    copy of each financial statement, report (including, without limitation,
    each Quarterly Report on Form 10-Q, each Annual Report on Form 10-K and each
    Current Report on Form 8-K), notice or proxy statement sent by the Company
    or any Subsidiary to stockholders generally and of each regular or periodic
    report and any registration statement, prospectus or written communication
    (other than transmittal letters), and each amendment thereto, in respect
    thereof filed by the Company or any Subsidiary with, or received by, such
    Person in connection therewith from, the National Association of Securities
    Dealers, any securities exchange or the Securities and Exchange Commission
    or any successor agency;

         (E)  ERISA --

              (I) promptly (and in any event, within five (5) Business Days)
         after any officer of the Company becoming aware of any

                   (A) "reportable event" (as defined in section 4043 of
              ERISA), or

                   (B) "prohibited transaction" (as defined in section 406 of
              ERISA or section 4975 of the IRC),

         in connection with any Pension Plan or any trust created thereunder, a
         written notice specifying the nature thereof, what action the Company
         is taking or proposes to take with respect thereto and, when known,
         any action taken by the IRS, the Department of Labor or the PBGC with
         respect thereto, and

              (II) promptly (and in any event, within five (5) Business Days)
         after any officer of the Company becoming aware thereof, written
         notice of and, where applicable, a description of

                   (A) any notice from the PBGC in respect of the commencement
              of any proceedings pursuant to section 4042 of ERISA to terminate
              any Pension Plan or for the appointment of a trustee to administer
              any Pension Plan,

                                      27
<PAGE>

                   (B) any distress termination notice delivered to the PBGC
              under section 4041 of ERISA in respect of any Pension Plan, and
              any determination of the PBGC in respect thereof,

                   (C) the placement of any Multiemployer Plan in
              reorganization status under Title IV of ERISA,

                   (D) any Multiemployer Plan becoming "insolvent" (as defined
              in section 4245 of ERISA) under Title IV of ERISA, or

                   (E) the whole or partial withdrawal of the Company or any
              ERISA Affiliate from any Multiemployer Plan and the withdrawal
              liability incurred in connection therewith;

         (F) ACTIONS, PROCEEDINGS -- promptly after the commencement thereof,
    notice of any action or proceeding relating to the Company or any Subsidiary
    in any court or before any Governmental Authority or arbitration board or
    tribunal as to which there is a reasonable probability of an adverse
    determination and that, if adversely determined, would have a Material
    Adverse Effect;

         (G) CERTAIN ENVIRONMENTAL MATTERS -- prompt written notice of and a
    description of any event or circumstance that, had such event or
    circumstance occurred or existed prior to the Closing Date, would have been
    required to be disclosed as an exception to any statement set forth in
    Section 2.14 and a description of the action that the Company is taking or
    proposes to take with respect thereto;

         (H) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- within five (5) Business
    Days of any Senior Officer becoming aware of the existence of any condition
    or event that constitutes a Default or an Event of Default, a written notice
    specifying the nature and period of existence thereof and what action the
    Company is taking or proposes to take with respect thereto;

         (I) NOTICE OF CLAIMED DEFAULT -- within five (5) Business Days of any
    Senior Officer becoming aware that the holder of any Note, or of any Debt or
    any Security of the Company or any Subsidiary, shall have given notice or
    taken any other action with respect to a claimed Default, Event of Default,
    default or event of default, a written notice specifying the notice given or
    action taken by such holder and the nature of the claimed Default, Event of
    Default, default or event of default and what action the Company is taking
    or proposes to take with respect thereto;

         (J) INFORMATION FURNISHED UNDER REVOLVING CREDIT AGREEMENT -- at any
    time that at least one Revolving Credit Agreement is

                                      48
<PAGE>

     in effect, at the same time required thereby, a copy of each item required
     to be furnished by the Company or any Subsidiary pursuant thereto;

          (K) OTHER CREDITORS -- promptly upon the request of any holder of
     Notes, copies of any statement, report or certificate furnished to any
     holder of Debt of the Company or any Subsidiary to the extent that the
     information contained in such statement, report or certificate has not
     already been delivered to each holder of Notes;

          (L) RULE 144A -- with reasonable promptness, upon the request of any
     holder of Notes, information required to comply with 17 C.F.R. (S)230.144A,
     as amended from time to time; and

          (M) REQUESTED INFORMATION -- with reasonable promptness, such other
     data and information as from time to time may be reasonably requested by
     any holder of Notes.

     7.2  OFFICER'S CERTIFICATES.

     Each set of financial statements delivered to each holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth:

          (A) COVENANT COMPLIANCE -- the information (including detailed
     calculations) required in order to establish whether the Company was in
     compliance with the requirements of Section 6.4 through Section 6.8,
     inclusive, and Section 6.10 through Section 6.15, inclusive, during the
     period covered by the income statement then being furnished (including with
     respect to each such Section, where applicable, the calculations of the
     maximum or minimum amount, ratio or percentage, as the case may be,
     permissible under the terms of such Sections, and the calculation of the
     amounts, ratio or percentage then in existence); and

          (B) EVENT OF DEFAULT -- a statement that the signer has reviewed the
     relevant terms of the Financing Documents and has made, or caused to be
     made, under his or her supervision, a review of the transactions and
     conditions of the Company and the Subsidiaries from the beginning of the
     accounting period covered by the income statements being delivered
     therewith to the date of the certificate and that such review shall not
     have disclosed the existence during such period of any condition or event
     that constitutes a Default or an Event of Default or, if any such condition
     or event existed or exists, specifying the nature and period of existence
     thereof and what action the Company shall have taken or proposes to take
     with respect thereto.

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<PAGE>

     7.3  ACCOUNTANTS' REPORT.

     Each set of annual financial statements delivered pursuant to Section
7.1(b) shall be accompanied by a certificate of the accountants who certify such
financial statements, stating that they have reviewed this Agreement and stating
further, whether, in making their audit, such accountants have become aware of
any condition or event that then constitutes a Default or an Event of Default,
and, if such accountants are aware that any such condition or event then exists,
specifying the nature and period of existence thereof.

     7.4  INSPECTION.

     The Company shall permit the representatives of each holder of Notes (at
the expense of the Company) to visit and inspect any of the Properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (former and present) (and
by this provision the Company authorizes all such accountants to discuss the
finances and affairs of the Company and the Subsidiaries), all at such
reasonable times and as often as may be reasonably requested.

8.   EVENTS OF DEFAULT

     8.1  NATURE OF EVENTS.

     An "EVENT OF DEFAULT" shall exist if any of the following occurs and is
continuing:

          (A) PRINCIPAL AND MAKE-WHOLE AMOUNT PAYMENTS -- the Company shall fail
     to make any payment of principal or Make-Whole Amount on any Note on or
     before the date such payment is due; or

          (B) INTEREST PAYMENTS -- the Company shall fail to make any payment of
     interest on any Note on or before the date such payment is due; or

          (C) WARRANTIES OR REPRESENTATIONS -- any warranty, representation or
     other material statement by or on behalf of the Company or any Subsidiary
     contained herein or in any instrument furnished in compliance with or in
     reference hereto or any of the other Financing Documents shall have been
     false or misleading when made or deemed made; or

          (D) PARTICULAR COVENANT DEFAULTS -- the Company or any Subsidiary
     shall fail to perform or observe any covenant contained in Section 6.4
     through Section 6.18, inclusive, Section 6.20, Section 6.22, Section 7.1(h)
     or Section 7.1(i); or

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<PAGE>

          (E) OTHER DEFAULTS -- the Company or any Subsidiary shall fail to
     comply with any other provision hereof, and such failure continues for more
     than thirty (30) days after such failure shall first become known to any
     officer of the Company; or

          (F) DEFAULT ON DEBT OR OTHER SECURITY --

               (I) the Company or any Subsidiary shall fail to make any payment
          on any Debt when due;

               (II) any event shall occur or any condition shall exist in
          respect of any Debt or any Security of the Company or any Subsidiary,
          or under any agreement securing or relating to such Debt or Security,
          that immediately or with the passage of time or the giving of notice
          or both:

                    (A) causes (or permits any one or more of the holders
               thereof or a trustee therefor to cause) such Debt or Security, or
               a portion thereof, to become due prior to its stated maturity or
               prior to its regularly scheduled date or dates of payment;

                    (B) permits any one or more of the holders thereof or a
               trustee therefor to elect any of the directors on the Board of
               Directors of the Company or such Subsidiary; or

                    (C) permits any one or more of the holders thereof or a
               trustee therefor to require the Company or any Subsidiary to
               repurchase such Debt or Security from such holder;

          provided that the aggregate amount of all obligations in respect of
          all such Debt and Securities referred to in this clause (f) exceeds at
          such time ten million dollars ($10,000,000); or

               (III)  an "Event of Default" shall have occurred under, and as
          defined in, any of the other Financing Documents and be continuing; or

          (G) INVOLUNTARY BANKRUPTCY PROCEEDINGS --

               (I) a receiver, liquidator, custodian or trustee of the Company
          or any Subsidiary, or of all or any of the Collateral or any material
          Property of the Company or any Subsidiary, shall be appointed by court
          order and such order remains in effect for more than thirty (30) days;
          or an order for relief shall be entered with

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<PAGE>

          respect to the Company or any Subsidiary, or the Company or any
          Subsidiary, shall be adjudicated insolvent;

               (II) any of the Collateral or any material Property of the
          Company or any Subsidiary shall be sequestered by court order and such
          order remains in effect for more than thirty (30) days; or

               (III)  a petition shall be filed against the Company or any
          Subsidiary under any bankruptcy, reorganization, arrangement,
          insolvency, readjustment of debt, dissolution or liquidation law of
          any jurisdiction, whether now or hereafter in effect, and shall not be
          dismissed within thirty (30) days after such filing; or

          (H) VOLUNTARY PETITIONS -- the Company or any Subsidiary shall file a
     petition in voluntary bankruptcy or seeking relief under any provision of
     any bankruptcy, reorganization, arrangement, insolvency, readjustment of
     debt, dissolution or liquidation law of any jurisdiction, whether now or
     hereafter in effect, or shall consent to the filing of any petition against
     it under any such law; or

          (I) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -- the Company or any
     Subsidiary shall make an assignment for the benefit of its creditors, or
     shall admit in writing its inability, or shall fail, to pay its debts
     generally as they become due, or shall consent to the appointment of a
     receiver, liquidator or trustee of the Company or any Subsidiary or of all
     or any part of the Property of them; or

          (J) UNDISCHARGED FINAL JUDGMENTS -- final judgment or judgments for
     the payment of money aggregating in excess of two million five hundred
     thousand dollars ($2,500,000) is or are outstanding against one or more of
     the Company and the Subsidiaries and any one of such judgments shall have
     been outstanding for more than thirty (30) days from the date of its entry
     and shall not have been discharged in full or stayed; or

          (K) CERTAIN OBLIGATIONS -- the undertakings of any Guarantor under the
     Joint and Several Guaranty shall at any time cease to constitute the legal,
     valid and binding obligation of such Guarantor, or any Guarantor or any
     Person acting by or on behalf of any Guarantor shall deny or disaffirm such
     Guarantor's obligations under the Joint and Several Guaranty or any
     undertaking of the Company hereunder shall at any time cease to constitute
     the legal, valid and binding obligation of the Company, enforceable against
     the Company.

If any action, condition, event or other matter would, at any time, constitute
an Event of Default under any provision of this Section 8.1, then an Event of
Default shall exist, regardless of whether the same or a similar action,

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<PAGE>

condition, event or other matter is addressed in a different provision of this
Section 8.1 and would not constitute an Event of Default at such time under such
different provision.

     8.2  DEFAULT REMEDIES.

          (A) ACCELERATION ON EVENT OF DEFAULT.  If an Event of Default
     specified in clause (g), (h) or (i) of Section 8.1 shall exist, all of the
     Notes at the time outstanding shall automatically become immediately due
     and payable together with interest accrued thereon and, to the extent
     permitted by law, the Make-Whole Amount at such time with respect to the
     principal amount of such Notes, and all other amounts due under the
     Financing Documents, without presentment, demand, protest or notice of any
     kind, all of which are hereby expressly waived, and, if any other Event of
     Default shall exist, the holder or holders of at least thirty-five percent
     (35%) in principal amount of the Notes then outstanding (exclusive of Notes
     then owned by any one or more of the Company, any Subsidiary and any
     Affiliate) may exercise any right, power or remedy permitted to such holder
     or holders by law, and shall have, in particular, without limiting the
     generality of the foregoing, the right to declare the entire principal of,
     and all interest accrued on, all the Notes then outstanding to be, and such
     Notes shall thereupon become, forthwith due and payable, without any
     presentment, demand, protest or other notice of any kind, all of which are
     hereby expressly waived, and the Company shall forthwith pay to the holder
     or holders of all the Notes then outstanding the entire principal of, and
     interest accrued on, the Notes and, to the extent permitted by law, the
     Make-Whole Amount at such time with respect to such principal amount of the
     Notes.

          (B) ACCELERATION ON PAYMENT DEFAULT.  During the existence of an Event
     of Default described in Section 8.1(a) or Section 8.1(b), and irrespective
     of whether the Notes then outstanding shall have been declared to be due
     and payable pursuant to Section 8.2(a), any holder of Notes who or that
     shall have not consented to any waiver with respect to such Event of
     Default may, at its option, by notice in writing to the Company, declare
     the Notes then held by such holder to be, and such Notes shall thereupon
     become, forthwith due and payable together with all interest accrued
     thereon, without any presentment, demand, protest or other notice of any
     kind, all of which are hereby expressly waived, and the Company shall
     forthwith pay to such holder the entire principal of and interest accrued
     on such Notes and, to the extent permitted by law, the Make-Whole Amount at
     such time with respect to such principal amount of the Notes and all other
     amounts due under the Financing Documents.

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<PAGE>

          (C) VALUABLE RIGHTS.  The Company acknowledges, and the parties hereto
     agree, that the right of each holder to maintain its investment in the
     Notes free from repayment by the Company (except as herein specifically
     provided for) is a valuable right and that the provision for payment of a
     Make-Whole Amount by the Company in the event that the Notes of any Series
     are prepaid or are accelerated as a result of an Event of Default is
     intended to provide compensation for the deprivation of such right under
     such circumstances.

          (D) OTHER REMEDIES.  During the existence of an Event of Default and
     irrespective of whether the Notes then outstanding shall have been declared
     to be due and payable pursuant to Section 8.2(a) or Section 8.2(b) and
     irrespective of whether any holder of Notes then outstanding shall
     otherwise have pursued or be pursuing any other rights or remedies, but
     subject to the terms and conditions of the Trust Agreement, any holder of
     Notes may proceed to protect and enforce its rights hereunder, under such
     Notes and under the other Financing Documents by exercising such remedies
     as are available to such holder in respect thereof under applicable law,
     either by suit in equity or by action at law, or both, whether for specific
     performance of any agreement contained herein or in aid of the exercise of
     any power granted herein, provided that the maturity of such holder's Notes
     may be accelerated only in accordance with Section 8.2(a) and Section
     8.2(b).

          (E) NONWAIVER AND EXPENSES.  No course of dealing on the part of any
     holder of Notes nor any delay or failure on the part of any holder of Notes
     to exercise any right shall operate as a waiver of such right or otherwise
     prejudice such holder's rights, powers and remedies.  If the Company shall
     fail to pay when due any principal of, or Make-Whole Amount or interest on,
     any Note, or shall fail to comply with any other provision of the Financing
     Documents, the Company shall pay to each holder of Notes, to the extent
     permitted by law, such further amounts as shall be sufficient to cover the
     costs and expenses, including but not limited to reasonable attorneys'
     fees, incurred by such holder in collecting any sums due on such Notes or
     in otherwise assessing, analyzing or enforcing any rights or remedies that
     are or may be available to it.

     8.3  ANNULMENT OF ACCELERATION OF NOTES.

     If a declaration is made pursuant to Section 8.2(a), then and in every such
case, the holders of sixty-six percent (66%) in aggregate principal amount of
the Notes then outstanding (exclusive of Notes then owned by any one or more of
the Company, any Subsidiary and any Affiliate) may, by written instrument filed
with the Company, rescind and annul such declaration, and

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<PAGE>

the consequences thereof, provided that at the time such declaration is annulled
and rescinded:

          (A) no judgment or decree shall have been entered for the payment of
     any moneys due on or pursuant hereto or the Notes;

          (B) all arrears of interest upon all the Notes and all other sums
     payable hereunder and under the Notes (except any principal of, or interest
     or Make-Whole Amount on, the Notes that shall have become due and payable
     by reason of such declaration under Section 8.2(a)) shall have been duly
     paid; and

          (C) each and every other Default and Event of Default shall have been
     waived pursuant to Section 10.5 or otherwise made good or cured; and
     provided further that no such rescission and annulment shall extend to or
     affect any subsequent Default or Event of Default or impair any right
     consequent thereon.

9.   INTERPRETATION OF THIS AGREEMENT

     9.1  TERMS DEFINED.

     As used herein, the following terms have the respective meanings set forth
below or set forth in the Section following such term:

          ACCEPTABLE BANK - means any commercial bank

               (A) that is organized under the laws of the United States or any
          state thereof,

               (B) that has capital, surplus and undivided profits aggregating
          at least five hundred million dollars ($500,000,000), and

               (C) whose long-term unsecured debt obligations (or the long-term
          unsecured debt obligations of the bank holding company owning all of
          the capital stock of such bank) shall be rated "A3" or higher by
          Moody's or "A-" or higher by Standard & Poor's (or comparable ratings
          by any comparable successor agency).

          ACCEPTABLE CONSIDERATION -- means, with respect to any Transfer of any
     Property of the Company or any Subsidiary, cash consideration, promissory
     notes or such other consideration (or any combination of the foregoing) as
     is, in each case, determined by the Board of Directors of the Company or
     such Subsidiary, in its good faith opinion, to be in the best interests of
     the Company and to reflect the Fair Market Value of such Property.

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<PAGE>

          ACCEPTABLE RATING -- means a rating of at least Baa2 by Moody's and,
     in addition, a rating of at least BBB by Standard & Poor's.

          AFFILIATE -- means, at any time, a Person (other than a Subsidiary)

               (A) that directly or indirectly through one or more
          intermediaries controls, or is controlled by, or is under common
          control with, the Company,

               (B) that beneficially owns or holds five percent (5%) or more of
          any class of the Voting Stock of the Company, or

               (C) five percent (5%) or more of the Voting Stock (or in the case
          of a Person that is not a corporation, five percent (5%) or more of
          the equity interest) of which is beneficially owned or held by the
          Company or a Subsidiary,

     at such time.

     As used in this definition:

               Control -- means the possession, directly or indirectly, of the
          power to direct or cause the direction of the management and policies
          of a Person, whether through the ownership of voting securities, by
          contract or otherwise.

          AGREEMENT, THIS -- means this agreement, as it may be amended or
     restated from time to time.

          APPLICABLE H.15 -- means, at any time, United States Federal Reserve
     Statistical Release H.15(519) or its successor publication most recently
     published and available to the public at such time, or if no such successor
     publication is available, then any other source of current information in
     respect of interest rates on securities of the United States of America
     that is generally available and, in the sole judgment of the Required
     Holders, provides information reasonably comparable to the H.15(519)
     report.

          ASSUMPTION AGREEMENT - means that certain Assumption Agreement
     pursuant to which Packing LLC agrees to assume the obligations of, and
     become a party to, the Packing-Bladen Deed of Trust and the Packing
     Security Agreement in the form of Exhibit E attached hereto to be recorded
     in the Land Records of Bladen County, North Carolina immediately following
     the recordation of the deed or other instrument of transfer of the Property
     which is the subject thereof from Packing to Packing LLC.

                                      56
<PAGE>

          BANK FUNDED DEBT AMOUNT -- means, at any time, the smallest average
     daily principal amount of all Debt of the Company and the Subsidiaries
     under all Revolving Credit Agreements of the Company and the Subsidiaries
     which is outstanding during any period of thirty (30) consecutive days
     selected by the Company falling within the three hundred sixty-five (365)
     day period ending at such time.

          BLADEN COUNTY COGENERATION PROPERTY -- means that certain piece or
     parcel of land located in Hollow Township, Bladen County, North Carolina,
     together with a certain twenty-five (25) foot right of way easement, which
     property is more particularly described in that certain Deed made and
     entered into on or around July 16, 1997, by and between The Smithfield
     Packing Company, Incorporated, as grantor and party of the first part, and
     United Supply of America, as grantee and party of the second part, together
     with any and all buildings, structures, improvements, fixtures, equipment,
     machinery and other property now or hereafter affixed to, located on,
     within or beneath, or used in connection with said property.

          BLADEN COUNTY OPTION DOCUMENTS -- means that certain Steam Purchase
     and Sales Agreement dated July 16, 1997, between United Supply of America,
     as supplier, and The Smithfield Packing Company, Incorporated, as
     purchaser, together with that certain Memorandum of Option to Purchase made
     and executed by United Supply of America in connection therewith or any
     other instruments and agreements pursuant to which The Smithfield Packing
     Company, Incorporated, or its successors and assigns, may acquire all or
     any portion of the Bladen County Cogeneration Property.

          BOARD OF DIRECTORS -- means, at any time with respect to any Person,
     the board of directors of such Person, or any committee thereof which, in
     the instance, shall have the lawful power to exercise the power and
     authority of such board of directors.

          BROWN'S -- means Brown's of Carolina, Inc., a North Carolina
     corporation, and its successors and assigns.

          BUSINESS DAY -- means

               (A) with respect to any payment to be made to the holder of any
          Note under any of the Financing Documents, a day other than a
          Saturday, a Sunday or a day on which the bank designated by such
          holder to receive for such holder's account payments on such Note is
          required by law (other than a general banking moratorium or holiday
          for a period exceeding four (4) consecutive days) to be closed, and

                                      57
<PAGE>

               (B) for all other purposes, a day other than a Saturday, a Sunday
          or a day on which the national banks located in New York City, New
          York, are required by law (other than a general banking moratorium or
          holiday for a period exceeding four (4) consecutive days) to be
          closed.

          CAPITAL LEASE -- means a lease with respect to which the lessee is
     required to recognize the acquisition of an asset and the incurrence of a
     liability in accordance with GAAP, or for which the amount of the asset and
     the liability thereunder, as if so capitalized, should be disclosed in a
     note to such balance sheet.

          CAPITAL LEASE OBLIGATION -- means, with respect to any Person and a
     Capital Lease, the amount of the obligation of such Person as the lessee
     under such Capital Lease that would appear as a liability on a balance
     sheet of such Person prepared in accordance with GAAP.

          CHANGE IN CONTROL -- means the acquisition at any time after the
     Closing Date by any Person or group of related Persons of beneficial
     ownership of more than fifty percent (50%) of the Voting Stock of the
     Company outstanding (excluding for such purpose Persons who own shares
     through any employee benefit plan of the Company or any trust in connection
     therewith) at such time.

          CLOSING -- Section 1.2(b).

          CLOSING DATE -- Section 1.2(b).

          COLLATERAL -- shall have the meaning assigned to such term in the
     Trust Agreement.

          COLLATERAL RELEASE CONDITIONS -- means, at any time:

               (A) the Acceptable Rating is in full force and effect, not having
          been withdrawn by Moody's or Standard & Poor's;

               (B) any and all Liens on Property of the Company or any Guarantor
          securing Debt incurred under or pursuant to each Revolving Credit
          Agreement of the Company or any Subsidiary have been released or will
          be released on or prior to the Collateral Release Date;

               (C) the aggregate principal amount of all Debt of the Company and
          the Subsidiaries secured by Liens permitted solely by Section
          6.13(a)(x) does not exceed fifteen percent (15%) of Consolidated
          Tangible Net Worth, determined at such time;

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<PAGE>

               (D) the Company and the holders of the Notes shall have entered
          into an amendment to the Note Purchase Agreements, in form and
          substance satisfactory to all holders of the Notes, which provides for
          an amendment to the covenants set forth in Section 6.4 through 6.15,
          inclusive, such that the Company's obligations concerning its
          financial condition and results of operations are established in a
          manner which, if complied with, would result in the Company at all
          times maintaining an Acceptable Rating for its long term, senior
          unsecured debt; and

               (E) no Default or Event of Default exists;

     in each case as of such time.

          COLLATERAL RELEASE DATE -- Section 1.5.

          COMPANY -- has the meaning specified in the introductory sentence.

          COMPANY FISCAL YEAR NET WORTH INCREASE AMOUNT -- means, for any fiscal
     year of the Company, the greater of

                    (I) fifty percent (50%) of Consolidated Net Income for such
               fiscal year and

                    (II)  zero dollars ($0).

          CONSOLIDATED CURRENT ASSETS -- means, at any time, the aggregate
     amount at which the current assets of the Company and the Subsidiaries
     would be shown on a consolidated balance sheet for such Persons at such
     time.

          CONSOLIDATED CURRENT LIABILITIES -- means, at any time, the aggregate
     amount of current liabilities of the Company and the Subsidiaries as would
     be shown on a consolidated balance sheet for such Persons at such time
     including, without limitation, all liabilities of the Company and the
     Subsidiaries under the Revolving Credit Facilities (other than the Bank
     Funded Debt Amount) at such time.

          CONSOLIDATED EBITDA -- means, with respect to any fiscal period, the
     sum of

               (A)  Consolidated Net Income, plus

               (B) the aggregate amount of all interest expense, depreciation,
          amortization and income taxes,

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<PAGE>

     (to the extent, and only to the extent, that such aggregate amount was
     deducted in the computation of Consolidated Net Income), in each case
     accrued for such period by the Company.

          CONSOLIDATED FIXED CHARGES -- means, with respect to any fiscal
     period, the sum of

               (A) the amount payable in respect of such fiscal period with
          respect to interest due on, or with respect to, Debt (including,
          without limitation, the Notes) owing by or guaranteed by any one or
          more of the Company and the Subsidiaries and including, without
          limitation, amortization of debt discount and expense and imputed
          interest in respect of Capital Lease Obligations of the Company and
          the Subsidiaries, plus

               (B) the amount payable in respect of such fiscal period with
          respect to Operating Rentals payable by any one or more of the Company
          and the Subsidiaries,

     determined on a consolidated basis for the Company and the Subsidiaries for
     such period.

          CONSOLIDATED FUNDED DEBT -- means, at any time, the aggregate amount
     of Funded Debt of the Company and the Subsidiaries, determined on a
     consolidated basis for such Persons at such time.

          CONSOLIDATED INTANGIBLE ASSETS -- means, at any time, the aggregate
     amount of Intangible Assets of the Company and the Subsidiaries, determined
     on a consolidated basis at such time.

          CONSOLIDATED NET INCOME -- means, with respect to any fiscal period,
     net earnings (or loss) after income taxes of the Company and the
     Subsidiaries determined on a consolidated basis for such Persons for such
     period, provided there shall be excluded:

               (A) any net income or gain (or net loss) during such period from
          any extraordinary items, and

               (B) the income (or loss) of any Person (other than a Subsidiary)
          in which the Company or any Subsidiary has an ownership interest,
          except to the extent that any such income has been actually received
          by the Company or such Subsidiary in the form of cash dividends or
          similar cash distributions.

          CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES -- means, with
     respect to any fiscal period, the sum of

                                      60
<PAGE>

               (A)  Consolidated Net Income, plus

               (B)  the aggregate amount of

                    (I)  income taxes, and

                    (II)  Consolidated Fixed Charges,

          (to the extent, and only to the extent, that such aggregate amount was
          reflected in the computation of Consolidated Net Income),

     in each case accrued for such period by the Company and the Subsidiaries,
     determined on a consolidated basis for such Persons.

          CONSOLIDATED SENIOR FUNDED DEBT -- means, at any time, the result of
     (a) Consolidated Funded Debt at such time minus (b) Senior Subordinated
     Debt at such time.

          CONSOLIDATED SHAREHOLDERS' EQUITY -- means, at any time, the aggregate
     amount of shareholders' equity of the Company and the Subsidiaries as would
     be shown on a consolidated balance sheet of such Persons at such time.

          CONSOLIDATED TANGIBLE NET WORTH -- means, at any time, the result of

               (a) Consolidated Shareholders' Equity, minus

               (b) Consolidated Intangible Assets,

     determined in each case at such time.

          CONSOLIDATED TOTAL ASSETS -- means, at any time, the aggregate amount
     at which all assets of the Company and the Subsidiaries would be shown on a
     consolidated balance sheet for such Persons at such time.

          CONSOLIDATED TOTAL CAPITALIZATION -- means, at any time, the sum of

               (a) Consolidated Shareholders' Equity, plus

               (b)  Consolidated Funded Debt,

     determined in each case at such time.

          CONSOLIDATED TOTAL LIABILITIES -- means, at any time, the aggregate
     amount at which all liabilities of the Company and the Subsidiaries
     (including, without limitation, (a) all Guaranties of Debt by

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such Persons and (b) all amounts attributable to Mandatorily Redeemable Stock of
the Company and the Subsidiaries to the extent that such Mandatorily Redeemable
Stock is redeemable within one year of such time) would be shown on a
consolidated balance sheet for such Persons at such time.

         CONSOLIDATED WORKING CAPITAL -- means, at any time, the result of

               (A) Consolidated Current Assets, minus

               (B) Consolidated Current Liabilities,

determined in each case at such time.

         CONTROL EVENT -- means

               (A) the execution by the Company, any Subsidiary or any Affiliate
          of any letter of intent with respect to any proposed transaction or
          event or series of transactions or events that, individually or in the
          aggregate, could reasonably be expected to result in a Change in
          Control,

               (B) the execution of any written agreement that, when fully
          performed by the parties thereto, would result in a Change in Control,
          or

               (C) the making of any written offer by any Person to the holders
          of Voting Stock of the Company which offer, if accepted by the
          requisite number of such holders, would result in a Change in Control.

         CONTROL PREPAYMENT DATE -- Section 4.3(a).

         CREDIT FACILITY -- means that certain Credit Agreement among the
Company, certain of the Subsidiaries, The Chase Manhattan Bank as administrative
agent and the lenders party thereto, providing for an aggregate amount of up to
six hundred fifty million dollars ($650,000,000) in loans to the Company, as
amended from time to time.

         DEBT -- means, at any time, with respect to any Person, without
duplication:

               (A) all obligations of such Person for borrowed money (including,
          without limitation, all obligations of such Person evidenced by any
          debenture, bond, note, commercial paper or Security, but also
          including all such obligations for borrowed money not so evidenced);

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         (B) all obligations of such Person to pay the deferred purchase
    price of Property or services, all conditional sale obligations of such
    Person and all obligations of such Person under any title retention
    agreements, provided that accounts payable incurred in the ordinary course
    of business of such Person shall be excluded from this clause (b);

         (C) all Capital Lease Obligations of such Person;

         (D) all obligations for borrowed money secured by any Lien
    existing on Property owned by such Person (whether or not such obligations
    have been assumed by such Person or recourse in respect thereof is available
    against such Person); and

         (E) any Guaranty of such Person of any obligation or liability of
    another Person of a type described in any of clause (a) through clause
    (d), inclusive, of this definition.

Debt of a Person shall include all obligations of such Person of the character
described in clause (a) through clause (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

         DEEDS OF TRUST -- means, collectively, the Packing-Smithfield Deed of
Trust, the Packing-Bladen Deed of Trust, the Gwaltney-Smithfield Deed of Trust
and the Morrell Mortgage.

         DEFAULT -- means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.

         DEPRECIATION -- means, for any fiscal year of the Company, the
aggregate amount of depreciation attributable to the "Improvements" (as such
term is defined in the Deeds of Trust) which would be included in the total
amount of depreciation that would be shown on a statement of income prepared in
respect of the Company and the Subsidiaries on a consolidated basis for such
fiscal year.

         DISTRIBUTION -- means

         (A) any dividend or other distribution, direct or indirect, on
    account of capital stock of the Company or any Subsidiary (except
    dividends payable solely in shares of capital stock other than
    Mandatorily Redeemable Stock of the Company or such Subsidiary), and

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               (B) any redemption, retirement, purchase or other acquisition,
        direct or indirect, of any capital stock of the Company or any
        Subsidiary, or of any warrants, rights or other options to acquire any
        shares of such capital stock.

          ENVIRONMENTAL INDEMNIFICATION AGREEMENT -- means, collectively, the
environmental indemnification agreements, dated as of July 15, 1996, as amended
from time to time, entered into by the Company with each of Packing, Gwaltney
and Morrell, to and for the benefit of the Security Trustee and the holders of
the Notes.

          ENVIRONMENTAL PROTECTION LAW -- means any federal, state, county,
regional or local law, statute, or regulation (including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Superfund Amendments and
Reauthorization Act, all amendments to any of the foregoing and all rules and
regulations issued in connection therewith) enacted in connection with or
relating to the protection or regulation of the environment, including, without
limitation, those laws, statutes, and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing, or
transporting of Hazardous Substances, and any regulations, issued or promulgated
in connection with such statutes by any Governmental Authority and any orders,
decrees or judgments issued by any court of competent jurisdiction in connection
with any of the foregoing.

    ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

    ERISA AFFILIATE -- means any corporation or trade or business that

         (I) is a member of the same controlled group of corporations
    (within the meaning of section 414(b) of the IRC) as the Company, or

         (II) is under common control (within the meaning of section
    414(c) of the IRC) with the Company.

    EVENT OF DEFAULT -- Section 8.1.

    EXCLUDED TRANSFERS -- Section 6.15(a)(iii).

    EXISTING NOTE PURCHASE AGREEMENT -- Section 1.1.

    FAIR MARKET VALUE -- means, at any time, with respect to any Property,
the sale value of such Property that would be realized in an arm's-length
sale at such time between an informed and willing buyer,

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and an informed and willing seller, under no compulsion to buy or sell,
respectively.

         FINANCING DOCUMENTS -- means the Note Purchase Agreements, the Notes,
the Joint and Several Guaranty, the Joinder Agreement, the Security Documents,
the Intercreditor Agreement, the Environmental Indemnification Agreement and the
other agreements and instruments to be executed pursuant to the terms of each of
such Financing Documents, as each may be amended from time to time.

         FOREIGN PENSION PLAN -- means any plan, fund or other similar program

               (A) established or maintained outside of the United States of
          America by any one or more of the Company or the Subsidiaries
          primarily for the benefit of the employees (substantially all of whom
          are aliens not residing in the United States of America) of the
          Company or such Subsidiaries which plan, fund or other similar program
          provides for retirement income for such employees or results in a
          deferral of income for such employees in contemplation of retirement,
          and

               (B)  not otherwise subject to ERISA.

          FUNDED DEBT -- means, at any time, with respect to any Person, without
duplication:

               (A) all Debt of such Person (including, without limitation, the
          current portion thereof) that by its terms or by the terms of any
          instrument or agreement relating thereto matures, or that is otherwise
          payable or unpaid, more than one (1) year from, or is directly or
          indirectly renewable or extendible at the option of such Person to a
          date more than one (1) year (including, without limitation, an option
          of the debtor under a revolving credit or similar agreement obligating
          the lender or lenders to extend credit over a period of more than one
          (1) year) from, the date of the creation of such Debt (notwithstanding
          that such Debt may be under certain contingencies payable on demand or
          within one (1) year after such date of creation), provided, however,
          that, with respect to the Company and the Subsidiaries, such Debt
          shall include, without duplication, only the Bank Funded Debt Amount
          and no other portion of any Debt outstanding under the Credit
          Facility;

               (B) all Capital Lease Obligations of such Person; and

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<PAGE>

               (C) all Debt of such Person of the type specified in clause (e)
          of the definition of "Debt," provided that such Debt of such Person is
          in respect of or in support of Funded Debt of another Person.

         GAAP -- means generally accepted accounting principles as set forth
from time to time in the statements, opinions and pronouncements of the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such statements, opinions and pronouncements of such other entities
as shall be approved by a significant segment of the accounting profession in
the United States of America.

         GOVERNMENTAL AUTHORITY -- means

               (A)  the government of

                    (I) the United States of America and any state or other
               political subdivision thereof, or

                    (II) any jurisdiction (A) in which the Company or any
               Subsidiary conducts all or any part of its business or (B) that
               asserts jurisdiction over the conduct of the affairs or
               Properties of the Company or any Subsidiary, or

               (B) any entity exercising executive, legislative, judicial,
          regulatory or administrative functions of, or pertaining to, any such
          government.

          GUARANTOR  -- means each of the Original Guarantors, each of the New
Guarantors and each other Person that becomes a "Guarantor" pursuant to the
Joint and Several Guaranty.

          GUARANTY -- means, with respect to any Person (for the purposes of
this definition, the "SUBJECT GUARANTOR"), any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (the "PRIMARY
OBLIGOR") in any manner (including, without limitation, obligations that arise
as a matter of law or otherwise as a result of such Person's status as a general
partner in a partnership or a holder of equity or other Property interest in a
corporation, partnership, limited liability company or other business operation
commonly referred to as a "joint venture"), whether directly or indirectly,
including (without limitation) obligations incurred through an agreement,
contingent or otherwise, by the Subject Guarantor:

                                      26
<PAGE>

               (A) to purchase such indebtedness or obligation or any Property
          or assets constituting security therefor;

               (B)  to advance or supply funds

                         (I) for the purpose of payment of such indebtedness or
                    obligation, or

                         (II) to maintain working capital or other balance sheet
                    condition or any income statement condition of the Primary
                    Obligor or otherwise to advance or make available funds for
                    the purchase or payment of such indebtedness or obligation;

               (C) to lease Property or to purchase Securities or other Property
          or services primarily for the purpose of assuring the owner of such
          indebtedness or obligation of the ability of the Primary Obligor to
          make payment of the indebtedness or obligation; or

               (D) otherwise to assure the owner of the indebtedness or
          obligation of the Primary Obligor against loss in respect thereof.

     For purposes of computing the amount of any Guaranty, in connection with
any computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the Subject Guarantor.

         GWALTNEY -- means Gwaltney of Smithfield, Ltd., a Delaware
corporation, together with its successors and assigns.

         GWALTNEY SECURITY AGREEMENT -- means the Security Agreement, dated as
of July 15, 1996, as amended from time to time, between Gwaltney and the
Security Trustee, pursuant to which Gwaltney has granted a first-priority lien
on and a security interest in certain personal property of Gwaltney to the
Security Trustee for the benefit of the holders of the Notes.

         GWALTNEY-SMITHFIELD DEED OF TRUST -- means the Amended, Restated and
Consolidated Deed of Trust, Security Agreement and Assignment of Rents and
Leases, dated as of July 15, 1996, as amended from time to time, by Gwaltney in
favor of Thomas E. Cabaniss and Laura R. Lucas, as trustees, for the benefit of
the Security Trustee.

         GWALTNEY-SMITHFIELD PROPERTY -- means the real Property of Gwaltney
identified in the Gwaltney-Smithfield Deed of Trust.

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         HAZARDOUS SUBSTANCES -- means any and all pollutants, contaminants,
toxic or hazardous wastes or any other substances that might pose a hazard to
health or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation, asbestos, radon gas, urea
formaldehyde foam insulation, polychlorinated biphenyls, radioactive materials,
petroleum and petroleum derivatives and by-products).

         INSTITUTIONAL INVESTOR -- means the Noteholders, any affiliate of any
of the Noteholders, and any holder of Notes that is an "accredited
investor" as defined in Section 2(15) of the Securities Act.

         INTANGIBLE ASSETS - means, with respect to any Person at any time, the
following:

               (A) patents, copyrights, trademarks, trade names, service marks,
          brand names, franchises, goodwill, experimental expenses and other
          similar intangibles;

               (B) deferred assets (other than prepaid taxes, prepaid insurance,
          prepaid contract payments, prepaid license fees and other prepaid
          expenses which are refundable);

               (C) unamortized debt discount and expense; and

               (D) all other Property which would be considered to be intangible
          under GAAP.

         INTERCREDITOR AGREEMENT -- means the Intercreditor Agreement, dated as
of July 15, 1996, as amended from time to time, among the Company, Gwaltney,
Packing, SFFC, Patrick Cudahy Incorporated, Brown's and the Secured Parties (as
defined therein).

         INVESTMENT -- means any investment, made in cash or by delivery of
Property, by the Company or any Subsidiary:

               (A) in any Person, whether by acquisition of stock, indebtedness
          or other obligation or Security, or by loan, Guaranty, advance,
          capital contribution or otherwise; or

               (B)  in any Property.

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<PAGE>

         IRC -- means the Internal Revenue Code of 1986, together with all
rules and regulations promulgated pursuant thereto, as amended from time to
time.

         IRS -- means the Internal Revenue Service and any successor agency.

         JOINDER AGREEMENT -- means the Joinder Agreement, dated as of the
Closing Date, entered into by each of the Guarantors, relating to the Joint
and Several Guaranty.

         JOINT AND SEVERAL GUARANTY -- means the Joint and Several Guaranty,
dated as of July 15, 1996, entered into by the Original Guarantors, as amended
by the Joinder Agreement and as further amended or restated from time to time.

         LIEN -- means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, deed of trust,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to give
any of the foregoing. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
definition, each of the Company and the Subsidiaries is deemed to be the owner
of any Property that it shall have acquired or holds subject to a conditional
sale agreement, Capital Lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a Lien. The term "Lien" does
not include negative pledge clauses in agreements relating to the borrowing of
money.

         MAKE-WHOLE AMOUNT -- means, at any time, with respect to a principal
amount of Notes being prepaid (in whole or in part) or accelerated, the
greater of

               (A)  Zero Dollars ($0), and

               (B)  the remainder of

                    (I) the sum of the present values of the then remaining
               scheduled payments of principal and interest that

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<PAGE>

               would be payable but for the prepayment or acceleration of such
               principal amount of Notes being prepaid or accelerated, minus

                    (II)  the sum of

                         (A) the aggregate principal amount of the Notes so
                    prepaid or accelerated, plus

                         (B) interest on such principal amount accrued during
                    the period beginning on the most nearly preceding scheduled
                    interest payment date preceding prepayment or acceleration
                    and ending on the date such principal amount was prepaid or
                    accelerated.

In determining such present values, a discount rate equal to the Make-Whole
Discount Rate at such time with respect to such principal amount of Notes being
prepaid or accelerated divided by four (4), and a discount period of three (3)
months of thirty (30) days each shall be used.

         MAKE-WHOLE DISCOUNT RATE -- means, at any time, with respect to a
principal amount of Notes being prepaid or accelerated,

               (A) the per annum percentage rate (rounded to the nearest three
          decimal places) equal to

                    (I) the annual yield to maturity at such time of the United
               States Treasury obligation listed in the then Applicable H.15 for
               the most recently available day in such Applicable H.15 with a
               Treasury Constant Maturity (as such term is defined in such
               Applicable H.15) equal to the Weighted Average Life to Maturity
               of the principal amount of the Notes then being prepaid or
               accelerated, or, if no such United States Treasury obligation is
               so listed, then

                    (II) the annual yield to maturity at such time determined by
               interpolating between

                         (A) the annual yield to maturity of the United States
                    Treasury obligations listed in such Applicable H.15 with a
                    Treasury Constant Maturity (as such term is defined in such
                    Applicable H.15) most nearly equal to and less than the
                    Weighted Average Life to Maturity of the principal amount of
                    Notes then being prepaid or accelerated, and

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                         (B) the annual yield to maturity of the United States
                    Treasury obligations listed in such Applicable H.15 with a
                    Treasury Constant Maturity (as such term is defined in such
                    Applicable H.15) most nearly equal to and greater than the
                    Weighted Average Life to Maturity of the principal amount of
                    Notes then being prepaid or accelerated, plus

               (B) fifty one-hundredths percent (0.50%) per annum.

     As used in this definition:

               Remaining Dollar-Years -- at any time with respect to any
     indebtedness for borrowed money means the product obtained by

                    (a)  multiplying

                         (i) the amount of each then remaining required
                    principal payment (including repayment of principal at final
                    maturity) of such borrowing unpaid immediately prior to such
                    time, by

                         (ii) the number of years (calculated to the nearest
                    one-twelfth) that will elapse between such time and the date
                    each such required principal payment is due, and

                    (b) calculating the sum of the products obtained in the
               preceding subsection (a).

               Weighted Average Life to Maturity -- at any time with respect to
    any indebtedness for borrowed money means the number of years obtained by
    dividing the then Remaining Dollar-Years of such indebtedness at such time
    by the then outstanding principal amount of such indebtedness.

    MANDATORILY REDEEMABLE STOCK -- means, with respect to any Person, each
share of such Person's capital stock to the extent that it is (a) redeemable,
payable or required to be purchased or otherwise retired or extinguished, or
convertible into Debt of such Person (i) at a fixed or determinable date,
whether by operation of a sinking fund or otherwise, (ii) at the option of any
Person other than such Person or (iii) upon the occurrence of a condition not
solely within the control of such Person, such as redemption required to be made
out of future earnings or (b) convertible into other Mandatorily Redeemable
Stock of such Person.

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         MATERIAL ADVERSE EFFECT -- means, with respect to any event or
circumstance (either individually or in the aggregate with all other events and
circumstances), an effect caused thereby or resulting therefrom that would be
materially adverse as to, or in respect of

               (A) the business, prospects, profits, Properties or condition
          (financial or otherwise) of the Company (individually) or the Company
          and the Subsidiaries (taken as a whole),

               (B) the ability of the Company to perform its obligations set
          forth herein and in the Notes or the ability of any Guarantor to
          perform its obligations under the Joint and Several Guaranty, or

               (C) any of the rights or remedies of the holders of the Notes
          under any Financing Document or the enforceability of any Financing
          Document against the Company or any Guarantor.

         MOODY'S -- means Moody's Investors Service, Inc.

         MORRELL  -- means John Morrell & Co., a Delaware corporation, and its
successors and assigns.

         MORRELL MORTGAGE -- means the Mortgage, Security Agreement and
Assignment of Rents and Leases, dated as of July 15, 1996, as amended from
time to time, by Morrell in favor of the Security Trustee.

         MORRELL PENSION PLANS -- means, collectively, the defined benefit
Pension Plan administered for salaried employees of Morrell and the defined
benefit Pension Plan administered for hourly employees of Morrell, in each case
as maintained on the Closing Date by Morrell.

         MORRELL SECURITY AGREEMENT -- means the Security Agreement, dated as
of July 15, 1996, as amended from time to time, between Morrell and the Security
Trustee, pursuant to which Morrell has granted a first-priority lien on and a
security interest in certain personal property of Morrell to the Security
Trustee for the benefit of the holders of the Notes.

         MULTIEMPLOYER PLAN -- means any multiemployer plan (as defined in
Section 3(37) of ERISA) in respect of which the Company or any ERISA Affiliate
is an "employer" (as such term is defined in Section 3(5) of ERISA).

         MULTIPLE EMPLOYER PENSION PLAN -- means any employee benefit plan
within the meaning of Section 3(3) of ERISA (other than a Multiemployer Plan),
subject to Title IV of ERISA, to which the Company or any ERISA Affiliate and an
employer (as such term is defined in

                                      72
<PAGE>

Section 3 of ERISA) other than an ERISA Affiliate or the Company contribute.

         NEW GUARANTORS -- means each of Carroll's Foods, Inc., Carroll's
Realty, Inc., Carroll's Realty Partnership, North Side Foods Corp., Lykes Meat
Group, Inc., Circle Four Corporation, Brown's Farms, LLC, Carroll's Foods of
Virginia, Inc., Smithfield-Carroll's Farms, Central Plains Farms, Inc., Packing
LLC and Murphy Farms, Inc.

         1999 NOTE PURCHASE AGREEMENT -- means, collectively, the separate Note
Purchase Agreements, dated as of October 27, 1999, as amended up to and
including the Closing Date, between the Company and each of the purchasers named
on Annex 1 thereto.

         NOTE -- Section 1.1.

         NOTE PURCHASE AGREEMENTS -- Section 1.2(c).

         NOTEHOLDER -- means the Persons listed as holders of Notes on Annex 1
hereto.

         OBLIGORS --means the Company and the Guarantors.

         OPERATING LEASE -- means any lease other than a Capital Lease.

         OPERATING RENTALS -- means, at any time, all fixed and contingent
payments (other than amounts constituting the purchase price payable by the
lessee to acquire title to the Property which is the subject of a lease) that
the lessee is required to make by the terms of any Operating Lease.

         ORIGINAL GUARANTORS -- means each of Gwaltney of Smithfield, Ltd.,
Morrell, The Smithfield Packing Company, Incorporated, SFFC, Inc., Patrick
Cudahy Incorporated and Brown's.

         PACKING - means The Smithfield Packing Company, Incorporated, a
Virginia corporation, together with its successors and assigns.

         PACKING LLC - means Smithfield Packing Real Estate, LLC, a Delaware
limited liability company, and a Wholly-Owned Subsidiary.

         PACKING SECURITY AGREEMENT -- means the Security Agreement, dated as
of July 15, 1996, as amended from time to time, between Gwaltney and the
Security Trustee, pursuant to which Gwaltney has granted a first-priority lien
on and a security interest in certain personal property of Gwaltney to the
Security Trustee for the benefit of the holders

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of the Notes, and as assumed by Packing LLC pursuant to the Assumption
Agreement.

         PACKING-BLADEN DEED OF TRUST - means the Amended and Restated Deed of
Trust, Security Agreement and Assignment of Rents and Leases, dated as of July
15, 1996, as amended from time to time, by Packing in favor of The Fidelity
Company, as trustee, for the benefit of the Security Trustee, as assumed by
Packing LLC pursuant to the Assumption Agreement.

         PACKING-SMITHFIELD DEED OF TRUST -- means the Amended, Restated and
Consolidated Deed of Trust, Security Agreement and Assignment of Rents and
Leases, dated as of July 15, 1996, as amended from time to time, by Packing in
favor of Thomas E. Cabaniss and Laura R. Lucas, as trustees, for the benefit of
the Security Trustee..

         PBGC - means the Pension Benefit Guaranty Corporation and any successor
corporation or governmental agency.

         PENSION PLAN --  means, at any time, any "employee pension benefit
plan" (as such term is defined in Section 3(2) of ERISA) maintained at such time
by the Company or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan, but including, without limitation
any Multiple Employer Pension Plan.

         PERMITTED DISTRIBUTIONS -- Section 6.12(a).

         PERMITTED EXCEPTIONS -- means each of the items constituting a
"Permitted Exception" in each of the Deeds of Trust.

         PERSON -- means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         PRE-CLOSING EVENTS OF DEFAULT -- means any Event of Default which may
have occurred on or after the date hereof and prior to the Closing Date which
shall have resulted from a failure by the Company to perform its obligations
under Section 6.11 or Section 6.12 of the Existing Note Purchase Agreement.

         PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.

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<PAGE>

         PURCHASE MONEY LIEN -- means:

               (A) a Lien held by any Person (whether or not the seller of such
         Property) on tangible Property (or a group of related items of Property
         the substantial portion of which are tangible) acquired or constructed
         by the Company or any Subsidiary, which Lien secures all or a portion
         of the related purchase price or construction costs of such Property,
         provided that such Lien

                    (I) is created contemporaneously with, or within one hundred
               eighty (180) days of, such acquisition or construction,

                    (II) encumbers only Property purchased or constructed after
               the Closing Date and acquired with the proceeds of the Debt
               secured thereby, and

                    (III)  is not thereafter extended to any other Property; and

               (B) any Lien existing on Property of any corporation at the time
          it becomes a Subsidiary, provided that

                    (I) no such Lien shall extend to or cover any Property other
               than the Property subject to such Lien at the time of any such
               transaction, and

                    (II) such Lien was not created in contemplation of any such
               transaction.

         REQUIRED HOLDERS -- means, at any time, the holder or holders of at
least sixty-six and two-thirds percent (66-2/3%) in principal amount of the
Notes at the time outstanding (exclusive of Notes then owned by any one or more
of the Company, any Subsidiary or any Affiliate), without regard to Series of
such outstanding Notes.

         RESTRICTED INVESTMENTS -- means, at any time, all Investments except
the following:

               (A) Investments in existence on the Closing Date and described on
          Part 9.1(RI) of Annex 2;

               (B) Investments in certificates of deposit, repurchase agreements
          and banker's acceptances issued by an Acceptable Bank, provided that
          such obligations mature within one (1) year from the date of
          acquisition thereof;

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<PAGE>

               (C) Investments in commercial paper that (i) is rated either "P-
          1" or higher by Moody's or "A-1" or higher by Standard & Poor's (or
          comparable ratings by any comparable successor agency) and (ii) mature
          not more than two hundred seventy (270) days from the date of creation
          thereof;

               (D) Investments in direct obligations of the United States of
          America, or any agency thereof, or obligations unconditionally
          guaranteed by the United States of America, provided that such
          obligations mature within one (1) year from the date of acquisition
          thereof;

               (E) Investments in Property to be used in the ordinary course of
          business of the Company and the Subsidiaries;

               (F) Investments in one or more Subsidiaries or in any corporation
          that concurrently with such Investment becomes a Subsidiary; and

               (G) Investments in one or more joint ventures that are engaged in
          the businesses engaged in by the Company and the Subsidiaries on the
          Closing Date, provided that the Company and/or one or more of the
          Subsidiaries maintains significant control over the business
          operations of such joint venture.

         RESTRICTED PAYMENT -- means

               (A)  any Distribution, and

               (B)  any Subordinated Payment.

         REVOLVING CREDIT AGREEMENT -- means, with respect to the Company or
any Subsidiary, a credit or loan agreement to which the Company or such
Subsidiary is a party and pursuant to which the Company or such Subsidiary is
entitled to obtain working capital loans or other loans from the commercial bank
or commercial banks party thereto, and shall include, without limitation, the
Credit Facility.

         SECURITIES ACT -- means the Securities Act of 1933, as amended.

         SECURITY -- means "security" as defined by Section 2(1) of the
Securities Act.

         SECURITY AGREEMENTS -- means, collectively, the Packing Security
Agreement, the Gwaltney Security Agreement and the Morrell Security Agreement.

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<PAGE>

         SECURITY DOCUMENTS -- means the Trust Agreement, the Deeds of Trust,
the Security Agreements, the SFFC Pledge Agreement and the other agreements and
instruments executed or required to be executed pursuant to the terms of each of
such Security Documents, as each may be amended from time to time.

         SECURITY TRUSTEE -- shall have the meaning assigned to such term in
the Trust Agreement.

         SENIOR FINANCIAL OFFICER -- means the chief financial officer, the
principal accounting officer, the controller or the treasurer of the
Company.

         SENIOR OFFICER -- means the chairman of the Board of Directors, the
chief executive officer, the chief operating officer, the president, the chief
financial officer, the general counsel or any vice president of the Company.

         SENIOR SUBORDINATED DEBT -- means, at any time, the aggregate
principal amount of the Company's Senior Subordinated Notes due 2008 outstanding
at such time and any additional Debt of the Company outstanding at such time
which has subordination provisions and other terms and conditions acceptable to
the Required Holders.

         SERIES -- means a series of Notes.

         SERIES A NOTES -- Section 1.1(a).

         SERIES B NOTES -- Section 1.1(b).

         SERIES C NOTES -- Section 1.1(c).

         SERIES D NOTES -- Section 1.1(d).

         SERIES E NOTES -- Section 1.1(e).

         SERIES F NOTES -- Section 1.1(f).

         SERIES G NOTES -- Section 1.1(g).

         SERIES H NOTES -- Section 1.1(h).

         SFFC -- means SFFC, Inc. a Delaware corporation, and its successors
and assigns.

         SFFC PLEDGE AGREEMENT -- means the Note Pledge Agreement, dated as of
July 15, 1996, as amended from time to time, between SFFC and the Security
Trustee.

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         STANDARD & POOR'S -- means Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc.

         SUBORDINATED PAYMENT -- means payments of interest on, or payments or
prepayments of principal of, or the setting apart of money for a sinking or
other analogous fund for the purchase, redemption, retirement or other
acquisition of any principal or interest on (a) Debt of the Company (including,
without limitation, Senior Subordinated Debt) or any Guarantor which is
subordinate or junior in right of payment or otherwise to the Debt evidenced by
the Notes or the Joint and Several Guaranty or (b) Debt owing to any Affiliate.

         SUBSIDIARY -- means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

         SUBSIDIARY STOCK -- Section 6.15(b).

         SURVIVING CORPORATION -- Section 6.14(a)(i).

         TRADEMARK SUBSIDIARY -- means a Subsidiary that has no material assets
other than:

               (A) patents, trademarks, service marks, trade names, copyrights
          and other similar licenses and intangibles used or useful in the
          conduct of the business of the Company or any Subsidiary;

               (B) intercompany obligations in its favor obtained in respect of
          the granting of rights to the Company and the other Subsidiaries with
          respect to the patents, trademarks, service marks, trade names,
          copyrights and other similar licenses and intangibles held by it; and

               (C) in the case of SF Investments, Inc, certain other assets
          (including, without limitation, the capital stock of Smithfield

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               Companies, Inc.) that are material but in any event whose primary
               assets are of the type described in clauses (a) and (b) above.

               TRANSFER -- Section 6.15(a).

               TRUST AGREEMENT -- means the Trust Agreement, dated as of July
         15, 1996, as amended from time to time, among the Company, Gwaltney,
         Morrell, Packing, SFFC, Patrick Cudahy Incorporated, Brown's, the Bank
         (as defined therein) and the Security Trustee.

               VOTING STOCK -- means capital stock of any class or classes of a
         corporation having power under ordinary circumstances to vote for the
         election of members of the board of directors, or Persons performing
         similar functions (irrespective of whether or not at the time stock of
         any of the class or classes shall have or might have special voting
         power or rights by reason of the happening of any contingency).

               WHOLLY-OWNED SUBSIDIARY -- means, at any time, any Subsidiary one
         hundred percent (100%) of all of the equity Securities (except
         directors' qualifying shares) and voting Securities of which are owned
         by any one or more of the Company and the other Wholly-Owned
         Subsidiaries at such time.

         9.2     GAAP.

         Where the character or amount of any asset or liability or item of
income or expense, or any consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall be done in accordance
with GAAP as in effect on the date of, or at the end of the period covered by,
the financial statements from which such asset, liability, item of income, or
item of expense, is derived, or, in the case of any such computation, as in
effect on the date as of which such computation is required to be determined,
provided, that if any term defined herein includes or excludes amounts, items or
concepts that would not be included in or excluded from such term if such term
were defined with reference solely to GAAP, such term will be deemed to include
or exclude such amounts, items or concepts as set forth herein.

         9.3     DIRECTLY OR INDIRECTLY.

         Where any provision herein refers to action to be taken by any Person,
or that such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.

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         9.4     SECTION HEADINGS, TABLE OF CONTENTS AND CONSTRUCTION.

         The titles of the Sections and the Table of Contents appear as a matter
of convenience only, do not constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof," "hereunder" and "hereto"
refer to this Agreement as a whole and not to any particular Section or other
subdivision. Unless otherwise specified, references to Sections are to Sections
of this Agreement, references to Annexes are to Annexes to this Agreement,
references to Attachments are to Attachments to this Agreement and references to
Exhibits are to Exhibits to this Agreement. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as being independent
of each other covenant contained herein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.

         9.5     GOVERNING LAW.

         THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, INTERNAL VIRGINIA LAW, EXCLUDING CHOICE-OF-LAW
PROVISIONS OF SUCH COMMONWEALTH THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN SUCH COMMONWEALTH.

10.     MISCELLANEOUS

        10.1     COMMUNICATIONS.

                (A)    METHOD; ADDRESS.  All communications hereunder or under
        the Notes shall be in writing and sent by telecopy with receipt thereof
        confirmed, or by registered or certified mail with return receipt
        requested (postage prepaid), or by overnight courier, and shall be
        addressed,

                       (I)  if to the Company,

                            Smithfield Foods, Inc.
                            200 Commerce Street
                            Smithfield, Virginia 23430
                            Attention:  Mr. C. Larry Pope
                            Fax:  (757) 365-3023

          or at such other address as the Company shall have furnished in
          writing to all holders of the Notes at the time outstanding,

                       (II) if to any Guarantor

                            c/o Smithfield Foods, Inc.
                            200 Commerce Street
                            Smithfield, Virginia 23430
                            Attention:  Mr. C. Larry Pope
                            Fax:  (757) 365-3023

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<PAGE>

         or at such other address as such Guarantor shall have furnished in
         writing to all holders of the Notes at the time outstanding,

               (III)     if to any of the holders of the Notes,

                    (A) if such holders are the Noteholders, at their respective
               addresses set forth on Annex 1, and further including any parties
               referred to on Annex 1 that are required to receive notices in
               addition to such holders of the Notes, and

                    (B) if such holders are not the Noteholders, at their
               respective addresses set forth in the register for the
               registration and transfer of Notes maintained pursuant to Section
               5.1,

         or to any such party at such other address as such party may designate
         by notice duly given in accordance with this Section 10.1 to the
         Company and the Guarantors (which other address shall be entered in
         such register).

         (B)    WHEN GIVEN.  Any communication so addressed and deposited in the
     United States mail, postage prepaid, by registered or certified mail (in
     each case, with return receipt requested) shall be deemed to be received on
     the third (3rd) succeeding Business Day after the day of such deposit (not
     including the date of such deposit). Any communication so addressed and
     delivered otherwise shall be deemed to be received when actually received
     at the address of the addressee.

     10.2     REPRODUCTION OF DOCUMENTS.

     This Agreement and the other Financing Documents, and all documents
relating hereto and thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at the closing of your purchase of the Notes (except the Notes
themselves) and (c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of Notes, may be
reproduced by any holder of Notes by any photographic, photostatic, microfilm,
micro-card, miniature photographic, digital or other similar process and each
holder of Notes may destroy any original document so reproduced. The Company and
the Guarantors agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such holder of Notes in the regular course of

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business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.

         10.3  SURVIVAL.

         All warranties, representations, certifications and covenants made by
the Company and the Guarantors herein and in the other Financing Documents or in
any certificate or other instrument delivered by the Company or the Guarantors
or on their behalf pursuant to any of the Financing Documents shall be
considered to have been relied upon by you and shall survive the delivery to you
of the Notes regardless of any investigation made by you or on your behalf. All
statements in any such certificate or other instrument shall constitute
warranties and representations by the Company and the Guarantors hereunder.

         10.4  SUCCESSORS AND ASSIGNS.

     This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.  The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder, whether or not an express assignment to
such holder of rights hereunder shall have been made by you or your successor or
assign.

        10.5   AMENDMENT AND WAIVER.

              (A)  REQUIREMENTS.  This Agreement may be amended, and the
        observance of any term hereof may be waived, with (and only with) the
        written consent of the Company and the Required Holders; provided that
        no such amendment or waiver of any of the provisions of Section 1
        through Section 4 hereof, inclusive, shall be effective as to any holder
        of Notes unless consented to by such holder in writing; and provided
        further that no such amendment or waiver shall, without the written
        consent of the holders of all Notes (exclusive of Notes held by the
        Company or any Subsidiary) at the time outstanding,

                   (I)  subject to Section 8.2, change the amount or time of any
              prepayment or payment of principal or Make-Whole Amount or the
              rate or time of payment of interest,

                   (II)     amend Section 8,

                   (III)     amend this Section 10.5, or

                   (IV)  release any Guarantor from its obligations set forth in
              the Joint and Several Guaranty.

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The holder of any Note may specify that any such written consent executed by it
shall be effective only with respect to a portion of the Notes held by it (in
which case it shall specify, by dollar amount, the aggregate principal amount of
Notes with respect to which such consent shall be effective) and in the event of
any such specification such holder shall be deemed to have executed such written
consent only with respect to the portion of the Notes so specified.

         (B)    SOLICITATION OF NOTEHOLDERS.

                (I)    SOLICITATION. The Company will not negotiate with any
     holder of the Notes with respect to a material matter, nor will it solicit,
     request or negotiate in writing with respect to any proposed waiver or
     amendment of any of the provisions hereof or the Notes or any other
     Financing Document, unless each holder of the Notes (irrespective of the
     amount of Notes then owned by it) shall be informed thereof by the Company
     with sufficient information to enable it to make an informed decision with
     respect thereto. Executed or true and correct copies of any waiver or
     consent effected pursuant to the provisions of this Section 10.5 shall be
     delivered by the Company to each holder of outstanding Notes forthwith
     following the date on which the same shall have been executed and delivered
     by all holders of outstanding Notes required to consent or agree to such
     waiver or consent.

                (II)   PAYMENT.  The Company shall not, directly or indirectly,
     pay or cause to be paid any remuneration, whether by way of supplemental or
     additional interest, fee or otherwise, or grant any security, to any holder
     of Notes as consideration for or as an inducement to the entering into by
     any holder of Notes of any waiver or amendment of any of the terms and
     provisions hereof unless such remuneration is concurrently paid, or
     security is concurrently granted, on the same terms, ratably to the holders
     of all Notes then outstanding.

                (III)  SCOPE OF CONSENT.  Any consent made pursuant to this
     Section 10.5 by a holder of Notes that has transferred or has agreed to
     transfer its Notes to the Company, any Subsidiary or any Affiliate and has
     provided or has agreed to provide such written consent as a condition to
     such transfer shall be void and of no force and effect except solely as to
     such holder, and any amendments effected or waivers granted or to be
     effected or granted that would not have been or would not be so effected or
     granted but for such consent (and the consents of all other holders of
     Notes that were acquired under the same or similar conditions) shall be
     void and of no force and effect, retroactive to the date such

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<PAGE>

         amendment or waiver initially took or takes effect, except solely as
         to such holder.

         (C)   BINDING EFFECT.  Except as provided in Section 10.5(b), any
     amendment or waiver consented to as provided in this Section 10.5 shall
     apply equally to all holders of Notes and shall be binding upon them and
     upon each future holder of any Note and upon the Company whether or not
     such Note shall have been marked to indicate such amendment or waiver. No
     such amendment or waiver shall extend to or affect any obligation,
     covenant, agreement, Default or Event of Default not expressly amended or
     waived or impair any right consequent thereon.

     10.6     PAYMENTS, WHEN RECEIVED.

             (A) PAYMENTS DUE ON HOLIDAYS.  If any payment due on, or with
     respect to, any Note shall fall due on a day other than a Business Day,
     then such payment shall be made on the first Business Day following the day
     on which such payment shall have so fallen due; provided that if all or any
     portion of such payment shall consist of a payment of interest, for
     purposes of calculating such interest, such payment shall be deemed to have
     been originally due on such first following Business Day, and such interest
     shall accrue and be payable to (but not including) the actual date of
     payment.

             (B) PAYMENTS, WHEN RECEIVED.  Any payment actually received by you
     before 11:00 a.m., New York time, by federal funds wire transfer on any
     Business Day, shall be deemed to have been received by you on such day. Any
     payment actually received by you at or after 11:00 a.m., New York time, by
     federal funds wire transfer on any Business Day, shall be deemed to have
     been received on the next following Business Day. All payments received by
     you on a day other than a Business Day, or in a manner other than by
     federal funds wire transfer, shall be deemed to have been received by you
     on the Business Day such amounts actually become available to you prior to
     11:00 a.m., New York time.

     10.7  ENTIRE AGREEMENT.

     This Agreement constitutes the final written expression of all of the terms
hereof and is a complete and exclusive statement of those terms.

     10.8  DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.

     Two or more duplicate originals hereof may be signed by the parties, each
of which shall be an original but all of which together shall constitute one and
the same instrument.  This Agreement may be executed in one or more counterparts
and shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which,

                                      84
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collectively, show execution by each party hereto shall constitute one
duplicate original.

     [REMAINDER OF PAGE INTENTIONALLY BLANK; NEXT PAGE IS SIGNATURE PAGE.]

                                      85
<PAGE>

     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding among us in
accordance with its terms.

                                    Very truly yours,

                                    SMITHFIELD FOODS, INC.

                                    By
                                      ----------------------------------------
                                           Name:
                                           Title:

ACCEPTED:
[NAME OF NOTEHOLDER]

By
  ----------------------------------
     Name:
     Title

                                      86

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