S-4

As filed with the Securities and Exchange Commission on February 11, 2004

Registration No. 333 –          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

MICHAEL FOODS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	2015	13-4151741
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

301 Carlson Parkway, Suite 400

Minnetonka, Minnesota 55305

(952) 258-4000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

John D. Reedy

Michael Foods, Inc.

301 Carlson Parkway, Suite 400

Minnetonka, Minnesota 55305

(952) 258-4000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

See Table of Additional Registrants Below

Copies to:

Todd R. Chandler, Esq.

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

(212) 310-8000

Approximate date of commencement of proposed sale of the securities to the public:    As soon as practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered		Proposed Maximum Offering Price Per Unit (1)		Proposed Maximum Aggregate Offering Price (1)		Amount of Registration Fee
8% Senior Subordinated Notes due 2013	$	150,000,000	100	%	$	150,000,000	$	19,005
Guarantees of 8% Senior Subordinated Notes due 2013		—	—			—		—	(2)

(1) Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(f)(2) under the Securities Act of 1933, as amended.

(2) The Additional Registrants will guarantee the payment of the 8% Senior Subordinated Notes due 2013. Pursuant to Section 457(n) of the Securities Act, no separate registration fee for the guarantees is payable

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

ADDITIONAL REGISTRANTS

Exact Name of Registrant as Specified in Its Charter	State or Other Jurisdiction of Incorporation or Organization	Primary Standard Industrial Classification Code Number	I.R.S. Employer Identification No.	Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices
Casa Trucking, Inc.	Minnesota	4212	22-3493806	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
Crystal Farms Refrigerated Distribution Company	Minnesota	5143	41-1669454	6465 Wayzata Blvd., Suite 200 Minneapolis, Minnesota 55426
Farm Fresh Foods, Inc.	Nevada	2033	91-2086470	3840 North Civic Center Dr. “B” North Las Vegas, Nevada 89030
KMS Dairy, Inc.	Minnesota	5143	41-0845810	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
M.G. Waldbaum Company	Nebraska	2015	47-0445304	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
Michael Foods of Delaware, Inc.	Delaware	2015	41-1579532	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
Minnesota Products, Inc.	Minnesota	2033	41-1394918	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
Northern Star Co.	Minnesota	2033	41-1468193	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
Papetti Electroheating Corporation	New Jersey	2015	22-3301353	One Papetti Plaza Elizabeth, New Jersey 07926
Papetti’s Hygrade Egg Products, Inc.	Minnesota	2015	22-3493805	301 Carlson Parkway, Suite 400 Minnetonka, Minnesota 55305
WFC, Inc.	Wisconsin	5143	41-1698341	450 North CP Avenue Lake Mills, Wisconsin 53551
Wisco Farm Cooperative	Wisconsin	5143	39-1524981	450 North CP Avenue Lake Mills, Wisconsin 53551

The name, address, including zip code and telephone number, including area code, of agent for service for each of the Additional Registrants is:

John D. Reedy

301 Carlson Parkway, Suite 400

Minnetonka, Minnesota 55305

(952) 258-4000

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated February 11, 2004

PROSPECTUS

Offer to exchange all outstanding

$150,000,000 principal amount of

8% Senior Subordinated Notes due 2013

for

$150,000,000 principal amount of

8% Senior Subordinated Notes due 2013

registered under the Securities Act of 1933

We are offering to exchange our outstanding notes described above for the new, registered notes described above. In this prospectus we refer to the outstanding notes as the “old notes” and our new notes as the “registered notes,” and we refer to the old notes and the registered notes, together, as the “notes.” The form and terms of the registered notes are identical in all material respects to the form and terms of the old notes, except for transfer restrictions, registration rights and additional interest payment provisions relating only to the old notes. We do not intend to apply to have any notes listed on any securities exchange or automated quotation system and there may be no active trading market for them.

Material Terms of the Exchange Offer

• The exchange offer expires at         , New York City time, on                     , 2004, unless extended. Whether or not the exchange offer is extended, the time at which it ultimately expires is referred to in this prospectus as the time of expiration.

• The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or interpretation of the staff of the Securities and Exchange Commission and that no injunction, order or decree of any court or governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect.

• All old notes that are validly tendered and not validly withdrawn will be exchanged.

• Tenders of old notes in the exchange offer may be withdrawn at any time prior to the time of expiration.

• We will not receive any cash proceeds from the exchange offer.

None of our affiliates, no broker-dealers that acquired old notes directly from us and no persons engaged in a distribution of registered notes may participate in the exchange offer. Any broker-dealer that acquired old notes as a result of market-making or other trading activities and receives registered notes for its own account in exchange for those old notes must acknowledge that it will deliver a prospectus in connection with any resale of those registered notes. The letter of transmittal states that, by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer for that purpose. We have agreed that, for a period ending on the earlier of (a) 180 days after the time of expiration and (b) the date on which broker-dealers are no longer required to deliver a prospectus in connection with market-making or other trading activities, we will make this prospectus available to any broker-dealer for use in connection with any resales by that broker-dealer. See “Plan of Distribution.”

Consider carefully the “ Risk Factors” beginning on page 13 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2004

TABLE OF CONTENTS

	Page
Trademarks	ii
Market, Ranking and Other Data	ii
Cautionary Note Regarding Forward-Looking Statements	ii
Terms Used in This Prospectus	iii
Prospectus Summary	1
Risk Factors	13
The Transactions	24
The Exchange Offer	25
Use of Proceeds	33
Capitalization	33
Unaudited Pro Forma Condensed Consolidated Financial Statements	34
Selected Historical Financial Data	41
Management’s Discussion and Analysis Of Financial Condition and Results of Operations	43
Business	60
Management	76
Security Ownership of Certain Beneficial Owners and Management	84
Certain Relationships and Related Transactions	86
Description of Credit Facilities	89
Description of Notes	93
United States Federal Income Tax Consequences	137
Plan of Distribution	138
Legal Matters	139
Independent Accountants	139
Available Information	139
Index to Consolidated Financial Statements	F-1

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TRADEMARKS

Sunny Side Up^®, Simply Eggs^®, Easy Eggs^®, Crystal Farms^®, Simply Potatoes^®, Deep Chill^®, Better ’n Eggs^®, Table Ready^®, Quaker State Farms^®, Broke N’ Ready^®, Centrova^®, Emulsa^® and Diner’s Choice^® are registered United States trademarks of Michael Foods, Inc., or Michael Foods, or of its wholly owned subsidiaries. All Whites^™, Chef’s Omelet^™, Farm Fresh^™, Logan Valley^™, Michael Foods^™, Express Eggs^™, Canadian Inovatech^™, Centromax^™ and Inovatech^™ are our trademarks. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective holders.

MARKET, RANKING AND OTHER DATA

The data included in this prospectus regarding markets and ranking, including the size of certain markets and our position and the position of our competitors within these markets, is based on reports of government agencies or published industry sources and our estimates based on our management’s knowledge and experience in the markets in which we operate. Our estimates have been based on information obtained from our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate. We believe these estimates to be accurate as of the date of this prospectus. However, this information may prove to be inaccurate because of the method by which we obtained some of the data for our estimates or because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. In addition, consumption patterns and consumer preferences can and do change rapidly, which could result in changes in data presented in this prospectus. As a result, you should be aware that market, ranking and other similar data included in this prospectus, and estimates and beliefs based on that data, may not be reliable.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain items in this prospectus are “forward-looking statements.” Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future sales and performance, capital expenditures, financing needs, intentions relating to acquisitions, competitive strengths and weaknesses and business strategy and the trends we anticipate in the industries and economies in which we operate and other information that is not historical information and, in particular, appear under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” When used in this prospectus, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them, but there can be no assurance that our expectations, beliefs and projections will be realized.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the results referred to in the forward-looking statements contained in this prospectus. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this prospectus include changes in domestic and international economic conditions. Additional risks and uncertainties include variances in the demand for our products due to consumer and industry developments, as well as variances in the costs to produce such products, including normal volatility in egg, feed and other raw material costs. If any of these risks or uncertainties materialize, or if any of our underlying assumptions are incorrect, our actual results may differ significantly from the results that we express in or imply by any of our forward-looking statements. We do not undertake any obligation to update or revise these forward-looking statements to reflect future events or circumstances.

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TERMS USED IN THIS PROSPECTUS

Except as otherwise required by the context, in this prospectus (a) “our company,” “we,” “us” or “our” refer to the historical and current business now operated by Michael Foods, Inc. and its subsidiaries, (b) the “issuer” refers to Michael Foods, Inc. exclusive of its subsidiaries, (c) the “predecessor” refers to the combined business of Michael Foods, Inc., which was incorporated in Minnesota, and all its then existing subsidiaries after its acquisition in April 2001 by an investor group comprised of members of senior management, two equity sponsors and affiliates of the Michael family and prior to its acquisition by affiliates of Thomas H. Lee Partners, L.P. and certain members of our senior management in November 2003, and (d) the “2001 predecessor” refers to the combined business of Michael Foods, Inc. and all its then existing subsidiaries prior to its acquisition in April 2001.

This prospectus was prepared by Michael Foods, Inc. which is a wholly owned subsidiary of M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.), or Holdings. Holdings is a Delaware corporation formed by an affiliate of Thomas H. Lee Partners, L.P. Holdings is owned by Michael Foods Investors, LLC (formerly known as THL-MF Investors, LLC), or MF Investors, whose members include affiliates of Thomas H. Lee Partners, L.P. and certain members of our senior management. For more information on the beneficial ownership of MF Investors, see “Security Ownership of Certain Beneficial Owners and Management.” The information contained in this prospectus has been provided by us, certain members of our senior management and by other sources identified in this prospectus.

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in making your investment decision. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled “Risk Factors” and the financial statements and the related notes to those statements. All references to market share contained in this prospectus are based on sales volumes unless otherwise indicated.

We are a leading producer and distributor of specialty egg and refrigerated potato products to the foodservice, retail and industrial ingredient markets. We also distribute refrigerated food items, primarily cheese and other dairy products, to the retail grocery market predominantly in the central United States. For the twelve months ended September 30, 2003, we generated net sales of $1,086.7 million on a pro forma basis after giving effect to the sale of our dairy products division, which we sold in October 2003.

The following charts set forth the net sales and operating profit of our three divisions—egg products, potato products and refrigerated distribution—as a percentage of total net sales and operating profit for these three divisions for the twelve months ended September 30, 2003.

Egg Products. We believe our egg products division is the largest producer of processed egg products and the third largest egg producer in the United States. For the twelve months ended September 30, 2003, the egg products division represented approximately 69% and 72% of the net sales and the operating profit of our three divisions, respectively.

Potato Products. We believe our potato products division is the largest processor and distributor in the United States of a wide variety of refrigerated potato products sold to the retail grocery and foodservice markets. Our products principally include hash browns and diced, sliced, mashed and other specialty potato products. For the twelve months ended September 30, 2003, the potato products division represented approximately 7% and 10% of the net sales and the operating profit of our three divisions, respectively.

Refrigerated Distribution. Our refrigerated distribution division is a distributor of over 400 branded and private label refrigerator case items to retailers and wholesale warehouses predominantly in the central United States. For the twelve months ended September 30, 2003, the refrigerated distribution division represented approximately 24% and 18% of the net sales and operating profit of our three divisions, respectively.

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Industry Trends

We believe that our specialty egg and refrigerated potato products are well positioned to continue capitalizing on the growth of the foodservice industry, which is being driven by increasing food consumption away from home. Our business is influenced by the following industry trends:

• Growth in the foodservice industry.

• Growth in egg consumption.

• Growth in higher value-added processed egg products.

• Consolidation in the foodservice distribution channel.

Our Competitive Strengths

We believe that the following key competitive strengths will contribute to our continued success:

• Extensive portfolio of specialty and branded products with leading regional and national market positions.

• Long-standing customer relationships.

• Large scale operator with efficient manufacturing operations.

• Industry-leading product development capabilities.

• Strong, proven management team with significant equity interest.

• Strong and stable free cash flow generation.

Our Business Strategy

Our strategy has enabled us to capitalize upon key industry trends, specifically the increases in both food prepared away from the home and the consumption of further-processed eggs. The primary components of our business strategy include the following:

• Move customers up the “value chain,” particularly for egg products.

• Capitalize on growth opportunities.

• Continue strategic sourcing and cost reduction programs.

• Pursue attractive acquisition and joint venture opportunities.

Recent Developments

On October 15, 2003, we completed the sale of our dairy products division to Dean Foods Company, or Dean Foods, for $155.0 million in cash. We used net after tax proceeds of approximately $127.0 million to repay debt under our then existing credit facility. The dairy products division had 2002 net sales of approximately $190.6 million and has three plants located in White Bear Lake, Minnesota, Sulphur Springs, Texas and Newington, Connecticut. The dairy products division product line consists primarily of ice cream mixes, creamers and soy and organic milk. The sale of the dairy products division allows us to focus on our core businesses.

2

The Transactions

On October 10, 2003, we entered into a merger agreement pursuant to which affiliates of Thomas H. Lee Partners, L.P. and certain members of our senior management acquired us for approximately $1.055 billion in cash, subject to certain adjustments. The acquisition and related financing transactions, described below, were consummated on November 20, 2003.

Concurrently with the acquisition, the following financing transactions occurred:

• an investment by affiliates of Thomas H. Lee Partners, L.P. totaling $290.0 million in cash;

• an equity investment by certain members of our senior management team of $33.0 million;

• the entering into of a senior secured credit facility providing for $495.0 million in term loans, which were drawn at closing and a revolving credit facility for working capital and general corporate purposes of $100.0 million, with available borrowing capacity at closing of approximately $93.5 million;

• the entering into of a senior unsecured term loan facility providing for loans of up to $135.0 million, which were drawn at closing; and

• the offering of $150.0 million in aggregate principal amount of old notes.

The proceeds from the financing transactions were used to:

• pay all amounts due to the former equityholders of M-Foods Holdings, the parent of our predecessor, under the terms of the merger agreement;

• repay all outstanding indebtedness under the predecessor’s then existing credit facility;

• repurchase the predecessor’s 11 ³/4% senior subordinated notes due 2011 pursuant to a tender offer and consent solicitation by THL Food Products Co.; and

• pay the fees and expenses related to the acquisition and the related financing transactions.

We refer to the acquisition, these financing transactions and the application of the proceeds from the financing transactions as the “transactions.”

Michael Foods, Inc. is a corporation organized under the laws of the State of Delaware. Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number is (952) 258-4000. Our worldwide web address is www.michaelfoods.com. Our web site and the information contained on our web site is not a part of this prospectus.

3

Summary of the Terms of the Exchange Offer

On November 20, 2003, the issuer issued $150.0 million aggregate principal amount of its 8% senior subordinated notes due 2013 in a transaction exempt from registration under the Securities Act of 1933. We refer to the issuance of the old notes in this prospectus as the “original issuance.”

At the time of the original issuance, we entered into an agreement in which we agreed to register new notes, with substantially the same form and terms of the old notes, and to offer to exchange the registered notes for the old notes. This agreement is referred to in this prospectus as the “registration rights agreement.”

Unless you are a broker-dealer and you satisfy the conditions set forth below under “—Resales of the Registered Notes,” we believe that the registered notes to be issued to you in the exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act. You should read the discussions under the headings “The Exchange Offer” and “Description of Notes” for further information regarding the registered notes.

Registration Rights Agreement

Under the registration rights agreement, the issuer is obligated to offer to exchange the old notes for registered notes with terms identical in all material respects to the old notes. The exchange offer is intended to satisfy that obligation. After the exchange offer is complete, except as set forth in the next paragraph, you will no longer be entitled to any exchange or registration rights with respect to your old notes. The registration rights agreement requires the issuer to file a registration statement for a continuous offering in accordance with Rule 415 under the Securities Act for your benefit if you would not receive freely tradeable registered notes in the exchange offer or you are ineligible to participate in the exchange offer and indicate that you wish to have your old notes registered under the Securities Act. See “The Exchange Offer—Procedures for Tendering.”

The Exchange Offer

The issuer is offering to exchange $1,000 principal amount of its 8% senior subordinated notes due 2013, which have been registered under the Securities Act, for each $1,000 principal amount of its unregistered 8% senior subordinated notes due 2013 that were issued in the original issuance. In order to be exchanged, an old note must be validly tendered and accepted. All old notes that are validly tendered and not validly withdrawn before the time of expiration will be accepted and exchanged. As of this date, there are $150.0 million aggregate principal amount of old notes outstanding. The issuer will issue the registered notes promptly after the time of expiration.

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Resales of the Registered Notes	Except as described below, we believe that the registered notes to be issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and (except with respect to broker-dealers) prospectus delivery provisions of the Securities Act if (but only if) you meet the following conditions:
	•	you are not an “affiliate” of the issuer, as that term is defined in Rule 405 under the Securities Act.
	•	if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from us and you comply with the prospectus delivery requirements of the Securities Act;
	•	the registered notes are acquired by you in the ordinary course of your business;
	•	you are not engaging in and do not intend to engage in a distribution of the registered notes; and
	•	you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes.
	Our belief is based on interpretations by the staff of the SEC, as set forth in no-action letters issued to third parties unrelated to us. The staff has not considered the exchange offer in the context of a no-action letter, and we cannot assure you that the staff would make a similar determination with respect to the exchange offer. If you do not meet the above conditions, you may not participate in the exchange offer or sell, transfer or otherwise dispose of any old notes unless (i) they have been registered for resale by you under the Securities Act and you deliver a “resale” prospectus meeting the requirements of the Securities Act or (ii) you sell, transfer or otherwise dispose of the registered notes in accordance with an applicable exemption from the registration requirements of the Securities Act. Any broker-dealer that acquired old notes as a result of market-making activities or other trading activities, and receives registered notes for its own account in exchange for old notes, must acknowledge that it will deliver a prospectus in connection with any resale of the registered notes. See “Plan of Distribution.” A broker-dealer may use this prospectus for an offer to resell or to otherwise transfer those registered notes for a period of 180 days after the time of expiration.
Time of Expiration	The exchange offer will expire at         , New York City time, on                     , 2004, unless we decide to extend the exchange offer. We do not intend to extend the exchange offer, although we reserve the right to do so. We will not extend the exchange offer past             , 2004.

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Conditions to the Exchange Offer	The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or applicable interpretation of the staff of the SEC and that no injunction, order or decree of any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect. See “The Exchange Offer—Conditions.”
Procedures for Tendering Old Notes Held in the Form of Book-Entry Interests	The old notes were issued as global notes in fully registered form without interest coupons. Beneficial interests in the old notes held by direct or indirect participants in The Depository Trust Company, or DTC, are shown on, and transfers of those interests are effected only through, records maintained in book-entry form by DTC with respect to its participants. If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration of the exchange offer either:
	•	a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, at the address set forth on the cover page of the letter of transmittal; or
	•	a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.
	The exchange agent must also receive on or prior to the expiration of the exchange offer either:
	•	a timely confirmation of book-entry transfer of your old notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described in this prospectus under the heading “The Exchange Offer—Book-Entry Transfer;” or
	•	the documents necessary for compliance with the guaranteed delivery procedures described below.
	A letter of transmittal for your notes accompanies this prospectus. By executing the letter of transmittal or delivering a computer-generated message through DTC’s Automated Tender Offer Program system, you will represent to us that, among other things:
	•	you are not an affiliate of the issuer;
	•	you are not a broker-dealer who acquired the old notes that you are sending to the issuer directly from the issuer;

6

	•	the registered notes to be acquired by you in the exchange offer are being acquired in the ordinary course of your business;
	•	you are not engaging in and do not intend to engage in a distribution of the registered notes; and
	•	you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes.
Procedures for Tendering Certificated Old Notes	If you are a holder of book-entry interests in the old notes, you are entitled to receive, in limited circumstances, in exchange for your book-entry interests, certificated notes which are in equal principal amounts to your book-entry interests. See “Description of Notes—Exchange of Global Notes for Certificated Notes.” If you acquire certificated old notes prior to the expiration of the exchange offer, you must tender your certificated old notes in accordance with the procedures described in this prospectus under the heading “The Exchange Offer—Procedures for Tendering—Certificated Old Notes.”
Special Procedures for Beneficial Owners	If you are the beneficial owner of old notes and they are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See “The Exchange Offer—Procedures for Tendering—Procedures Applicable to All Holders.”
Guaranteed Delivery Procedures	If you wish to tender your old notes in the exchange offer and:
	(1)	they are not immediately available;
	(2)	time will not permit your old notes or other required documents to reach the exchange agent before the expiration of the exchange offer; or
	(3)	you cannot complete the procedure for book-entry transfer on a timely basis,
	you may tender your old notes in accordance with the guaranteed delivery procedures set forth in “The Exchange Offer— Procedures for Tendering—Guaranteed Delivery Procedures.”

7

Acceptance of Old Notes and Delivery of Registered Notes	Except under the circumstances described above under “The Exchange Offer—Conditions,” the issuer will accept for exchange any and all old notes which are properly tendered prior to the time of expiration. The registered notes to be issued to you in the exchange offer will be delivered promptly following the time of expiration. See “The Exchange Offer—Terms of the Exchange Offer.”
Withdrawal	You may withdraw the tender of your old notes at any time prior to the time of expiration. We will return to you any old notes not accepted for exchange for any reason without expense to you as promptly after withdrawal, rejection of tender or termination of the exchange offer.
Exchange Agent	Wells Fargo Bank Minnesota, National Association is serving as the exchange agent in connection with the exchange offer.
Consequences of Failure to Exchange	If you do not participate in the exchange offer for your old notes, upon completion of the exchange offer, the liquidity of the market for your old notes could be adversely affected. See “The Exchange Offer—Consequences of Failure to Exchange.”
United States Federal Income Tax Consequences of the Exchange Offer	The exchange of old notes for registered notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See “United States Federal Income Tax Consequences.”

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Summary of Terms of the Registered Notes

The form and terms of the registered notes are the same as the form and terms of the old notes, except that the registered notes will be registered under the Securities Act. As a result, the registered notes will not bear legends restricting their transfer and will not contain the registration rights and liquidated damages provisions contained in the old notes. The registered notes represent the same debt as the old notes. Both the old notes and the registered notes are governed by the same indenture.

The summary below describes the principal terms of the registered notes. Some of the terms and conditions described below are subject to important limitations and exceptions. The “Description of Notes” section of this prospectus contains a more detailed description of the terms and conditions of the notes.

Issuer	Michael Foods, Inc., a Delaware corporation.
Securities	$150.0 million in principal amount of 8% senior subordinated notes due 2013 registered under the Securities Act.
Maturity	November 15, 2013.
Interest	Annual rate: 8%.
	Payment frequency: every six months on May 15 and November 15.
	First payment: May 15, 2004.
Ranking	The registered notes will be our unsecured senior subordinated debt. Accordingly, they will rank:
	•	junior to all of our existing and future senior debt, including borrowings under our senior credit facility and our senior unsecured term loan facility;
	•	equally with any of our future unsecured senior subordinated debt;
	•	senior to any of our future debt that expressly provides that it is subordinated to the registered notes; and
	•	effectively subordinated to any existing or future debt or other liabilities of any of our subsidiaries that do not guarantee the registered notes.
	Assuming the acquisition and the related financing transactions, including the offering of the old notes, were completed on September 30, 2003, the notes would have been subordinated to approximately $639.8 million of our senior debt, of which $630.0 million would have consisted of borrowings under our senior credit facility and our senior unsecured term loan facility.

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Guarantees	The registered notes will be unconditionally guaranteed on an unsecured senior subordinated basis by each of our existing and future domestic subsidiaries, other than subsidiaries treated as unrestricted subsidiaries and other than immaterial subsidiaries. We refer to these subsidiaries as subsidiary guarantors and the guarantees that such subsidiary guarantors provide as the guarantees. The guarantees will rank:
	•	junior to all existing and future senior debt of the subsidiary guarantors, including the subsidiary guarantors’ guarantees of borrowings under our senior credit facility and our senior unsecured term loan facility;
	•	equally with any future unsecured senior subordinated debt of the subsidiary guarantors; and
	•	senior to all future debt of the subsidiary guarantors that expressly provides that it is subordinated to the guarantees.
	Assuming the acquisition and the related financing transactions, including the offering of the old notes, were completed on September 30, 2003, the guarantees would have been subordinated to approximately $639.8 million (excludes guarantees of payment of certain industrial revenue bonds in the amount of $6.4 million) of senior debt of the subsidiary guarantors, of which $630.0 million would have consisted of guarantees of the issuer’s borrowings under our senior credit facility and our senior unsecured term loan facility.
Optional Redemption	We may redeem the registered notes, in whole or in part, at any time on or after November 15, 2008, at the redemption prices described in the section “Description of Notes—Optional Redemption,” plus accrued and unpaid interest.
	In addition, on or before November 15, 2006, we may redeem up to 40% of the registered notes with the net cash proceeds from certain equity offerings at the redemption price listed in “Description of Notes—Optional Redemption.” However, we may only make such redemptions if at least 60% of the aggregate principal amount of registered notes initially issued under the indenture remains outstanding immediately after the occurrence of such redemption.
Change of Control	Upon the occurrence of a change in control, we must offer to repurchase the registered notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase.
Certain Covenants	The indenture governing the registered notes, among other things, limits our ability and the ability of our restricted subsidiaries to:
	•	borrow money;
	•	pay dividends on or redeem or repurchase stock;
	•	make certain types of investments and other restricted payments;

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•	create liens;
•	sell certain assets or merge with or into other companies;
•	enter into certain transactions with affiliates;
•	sell stock in our restricted subsidiaries; and
•	restrict dividends or other payments from our subsidiaries.
These covenants contain important exceptions, limitations and qualifications. For more information, see “Description of Notes.”

You should refer to “Risk Factors,” beginning on page 13 for an explanation of the material risks of participating in the exchange offer and of investing in the registered notes.

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RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of earnings to fixed charges for the fiscal years ended December 31, 1998, 1999, and 2000, the three months ended March 31, 2001, the nine months ended December 31, 2001, the year ended December 31, 2002 and the nine months ended September 30, 2002 and September 30, 2003:

	2001 Predecessor								Predecessor
	Year Ended December 31,						Three Months Ended March 31, 2001		Nine Months Ended December 31, 2001		Year Ended December 31, 2002		Nine Months Ended September 30,
	1998		1999		2000								2002		2003
Ratio of earnings to fixed charges (1)	6.16	x	6.11	x	5.83	x	2.72	x	1.48	x	1.86	x	1.80	x	2.00	x

(1) For purposes of determining the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes and extraordinary items, plus fixed charges. Fixed charges consist of interest expense, including amortization of debt issuance costs and a portion of operating lease rental expense deemed to be representative of the interest factor.

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RISK FACTORS

Participating in the exchange offer and investing in the registered notes involves a high degree of risk. You should read and consider carefully each of the following factors, as well as the other information contained in this prospectus, before making a decision on whether to participate in the exchange offer. Additional risks and uncertainties not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations. Any of the following risks could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment.

Risks Associated with the Exchange Offer

Because there is no public market for the registered notes, you may not be able to resell your registered notes.

The registered notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market, and there can be no assurance as to:

• the liquidity of any trading market that may develop;

• the ability of holders to sell their registered notes; or

• the price at which the holders would be able to sell their registered notes.

If a trading market were to develop, the registered notes might trade at higher or lower prices than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar debentures and our financial performance.

We understand that the initial purchasers of the old notes presently intend to make a market in the notes. However, they are not obligated to do so, and any market-making activity with respect to the notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act, and may be limited during the exchange offer or the pendency of an applicable shelf registration statement. There can be no assurance that an active trading market will exist for the registered notes or that any trading market that does develop will be liquid.

In addition, any holder who tenders in the exchange offer for the purpose of participating in a distribution of the registered notes may be deemed to have received restricted securities, and if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. For a description of these requirements, see “The Exchange Offer.”

Your old notes will not be accepted for exchange if you fail to follow the exchange offer procedures and, as a result, your old notes will continue to be subject to existing transfer restrictions and you may not be able to sell your old notes.

We will not accept your old notes for exchange if you do not follow the exchange offer procedures. We will issue registered notes as part of this exchange offer only after a timely receipt of your old notes, a properly completed and duly executed letter of transmittal and all other required documents. Therefore, if you wish to tender your old notes, please allow sufficient time to ensure timely delivery. If we do not receive your old notes, letter of transmittal and other required documents by the time of expiration of the exchange offer, we will not accept your old notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of outstanding old notes for exchange. If there are defects or irregularities with respect to your tender of old notes, we will not accept your old notes for exchange.

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If you fail to exchange your old notes, they will continue to be restricted securities and may become less liquid.

Following the exchange offer, old notes that you do not tender or that are not accepted will continue to be restricted securities. You may not offer or sell restricted securities except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The issuer will issue registered notes in exchange for the old notes pursuant to the exchange offer only following the satisfaction of the procedures and conditions described elsewhere in this prospectus. These procedures and conditions include timely receipt by the exchange agent of the old notes and of a properly completed and duly executed letter of transmittal. Because we anticipate that most holders of old notes will elect to exchange their old notes, we expect that the liquidity of the market for any old notes remaining after the completion of the exchange offer may be substantially limited.

Risks Relating to the Notes

Our substantial indebtedness could adversely affect our financial health and prevent the issuer from fulfilling its obligations under these notes and reduce the cash available to support our business and operations.

As a result of the transactions, we have a significant amount of indebtedness. The following table sets forth our long-term debt, shareholder’s equity and ratio of earnings to fixed charges, after giving effect to the sale of our predecessor’s dairy products division and the repayment of a portion of our predecessor’s indebtedness under our predecessor’s then existing credit facility with the net after tax proceeds received therefrom, and the transactions, including the offering of the old notes and the application of the net proceeds therefrom as intended, as if they occurred on September 30, 2003 or January 1, 2002 in the case of the ratio of earnings to fixed charges:

	Pro Forma At September 30, 2003
	(in thousands)
Total debt	$	789,784
Shareholder’s equity	$	212,564
	Pro Forma Twelve Months Ended December 31, 2002
Ratio of earnings to fixed charges (1)		1.28x

(1) For purposes of computing ratio of earnings to fixed charges, earnings consist of income before taxes for the period plus fixed charges deductible in calculating income before taxes for the period. Fixed charges consist of interest incurred, amortization of deferred financing costs, and an amount representing the interest factor included in rental expense.

Our substantial indebtedness could have important consequences to you. For example, it could:

• make it more difficult for the issuer to satisfy its obligations with respect to the notes;

• increase our vulnerability to general adverse economic and industry conditions;

• require us to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, thereby reducing the availability of its cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;

• limit our flexibility in planning for, or reacting to, changes in its business and the markets in which it operates;

• increase our vulnerability to interest rate increases as borrowings under its senior credit facility and senior unsecured term loan facility are at variable rates;

• place us at a competitive disadvantage compared to its competitors that have less debt; and

• limit, among other things, our ability to borrow additional funds.

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In addition, we may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing the notes, the senior credit facility and the senior unsecured term loan facility would allow us to issue and incur additional debt upon satisfaction of certain conditions. As of September 30, 2003, on a pro forma basis after giving effect to the transactions, we would have had $93.5 million available for additional borrowing under the revolving credit facility under the senior credit facility after taking into account $6.5 million of outstanding letters of credit. If new debt is added to current debt levels, the related risks described above could intensify.

Your right to receive payments on the notes is junior to the issuer’s existing senior indebtedness and possibly all of its future borrowings. Further, the guarantees of the notes are junior to all of the guarantors’ existing senior indebtedness and possibly to all their future borrowings.

The notes and the guarantees are unsecured and rank junior to all of the issuer’s and the subsidiary guarantors’ existing senior indebtedness, including the issuer’s borrowings and the related guarantees by the subsidiary guarantors under the senior credit facility and the senior unsecured term loan facility, and all of the issuer’s and the subsidiary guarantors’ future senior indebtedness. Assuming our predecessor had completed the sale of its dairy products division and the application of the net proceeds therefrom and the transactions, including the offering of the old notes on September 30, 2003, these notes would have been subordinated to approximately $639.8 million of senior debt of the issuer of which $630.0 million would have consisted of borrowings under the senior credit facility and senior unsecured term loan facility, and the guarantees would have been subordinated to approximately $646.2 million of senior debt of the subsidiary guarantors, of which $630.0 million would have consisted of guarantees of the issuer’s borrowings under the senior credit facility and senior unsecured term loan facility. In addition, approximately $93.5 million would have been available for borrowing as additional senior debt under the revolving credit facility of the senior credit facility. We will be permitted to borrow substantial additional indebtedness, including senior debt, in the future.

As a result of that subordination, upon any distribution to the issuer’s creditors or the creditors of the subsidiary guarantors in a bankruptcy, liquidation or reorganization or similar proceeding relating to the issuer or the subsidiary guarantors or the issuer’s or the guarantors’ property, the holders of senior debt of the issuer and the subsidiary guarantors will be entitled to be paid in full before any payment may be made with respect to the notes or the subsidiary guarantees. In addition, all payments on the notes and the guarantees will be blocked in the event of a payment default on designated senior debt and may be blocked for up to 179 consecutive days in the event of certain non-payment defaults on designated senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to the issuer or the subsidiary guarantors, the indenture relating to the notes requires that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead until the holders of the senior debt are paid in full. As a result, holders of the notes may not receive all amounts owed to them and may receive less, ratably, than holders of trade payables and other unsubordinated indebtedness in any such proceeding.

Furthermore, upon default in payment to certain of the issuer’s and the subsidiary guarantors’ commodity suppliers, federal and state laws, including the Perishable Agricultural Commodities Act and the Minnesota Wholesale Produce Distributors Act, may create for these suppliers a floating statutory trust, which in effect grants these unpaid suppliers a claim on all of the issuer’s and the subsidiary guarantors’ inventories and products before the holders of secured or unsecured debt, including the notes.

Since the notes are unsecured, your right to enforce remedies is limited by the rights of holders of secured debt.

In addition to being contractually subordinated to all its existing and future senior debt, the issuer’s obligations under the notes will be unsecured while its obligations under the senior credit facility will be secured by substantially all of its assets and those of its subsidiaries. If the issuer becomes insolvent or is liquidated, or if payment under the senior credit facility is accelerated, the lenders under the senior credit facility will be entitled

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to exercise the remedies available to a secured lender under applicable law. These lenders will have a claim on all assets securing the senior credit facility before the holders of unsecured debt, including the notes. See “Description of Credit Facilities.”

The issuer will require a significant amount of cash to service its indebtedness. Its ability to generate cash depends on many factors beyond the issuer’s control.

The ability of the issuer to make payments on and to refinance its indebtedness, including the notes and amounts borrowed under the senior credit facility and the senior unsecured term loan facility, and to fund planned capital expenditures and expansion efforts and any strategic acquisitions we may make, if any, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond its control.

Based on its current level of operations, we believe our cash flow from operations, together with available cash and available borrowings under the revolving credit facility of our senior credit facility, will be adequate to meet our future liquidity needs for at least the next twelve months. However, we cannot assure you that our business will generate sufficient cash flow from operations in the future, that our currently anticipated growth in net sales and cash flow will be realized on schedule or that future borrowings will be available to us under its senior credit facility in an amount sufficient to enable the repayment of indebtedness, including the notes, or to fund other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our debt, including the senior credit facility, the senior unsecured term loan facility and the notes, on commercially reasonable terms or at all.

The senior credit facility, the senior unsecured term loan facility and the indenture related to the notes contain various covenants which limit our management’s discretion in the operations of our business.

The senior credit facility, the senior unsecured term loan facility and the indenture related to the notes contain various provisions which limit our management’s discretion by, among other things, restricting our ability to:

• borrow money;

• pay dividends on stock or repurchase stock;

• make certain types of investments and other restricted payments;

• create liens;

• use assets as security in other transactions;

• sell certain assets or merge with or into other companies;

• enter into certain transactions with affiliates;

• sell stock in certain of our subsidiaries; and

• restrict dividends or other payments to the issuer of the notes.

In addition, the senior credit facility requires us to meet certain financial ratios. Covenants in the senior credit facility also require us to use a portion of the proceeds we receive in specified debt or equity issuances to repay outstanding borrowings under our senior credit facility.

Any failure to comply with the restrictions of the senior credit facility, the senior unsecured term loan facility, the indenture related to the notes or any other subsequent financing agreements may result in an event of default. Such default may allow the creditors, if the agreements so provide, to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provisions applies. In addition, the lenders may be able to terminate any commitments they had made to provide us with further funds.

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The issuer may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture.

Upon the occurrence of certain specific kinds of change of control events, the issuer will be required to offer to repurchase all outstanding notes. However, it is possible that the issuer will not have sufficient funds at the time of the change of control to make the required repurchase of notes or that restrictions in the senior credit facility will not allow such repurchases. The issuer’s ability to repurchase these notes upon certain specific kinds of change of control events may be limited by the terms of its senior indebtedness and the subordination provisions of the indenture. For example, the senior credit facility will prohibit the issuer from repurchasing the notes after certain specific kinds of change of control events until it first repays debt under the senior credit facility in full or obtains a waiver from the bank lenders. If the issuer fails to repurchase the notes in that circumstance, it will go into default under the indenture related to the notes and the senior credit facility. The senior unsecured term loan facility also contains similar provisions to those specified in this paragraph. Any future debt which we incur may also contain restrictions on repayment which come into effect upon certain specific kinds of change of control events. If a change of control occurs, we cannot assure you that we will have sufficient funds to repay other debt obligations which will be required to be repaid, in addition to the notes. See “Description of Notes—Repurchase at the Option of Holders—Change of Control” and “Description of Credit Facilities.”

Federal and state statutes allow courts, under specific circumstances, to void the notes or the guarantees and require noteholders to return payments received from the issuer or the subsidiary guarantors.

If a bankruptcy case or lawsuit is initiated by unpaid creditors of the issuer or any subsidiary guarantor, the debt represented by the notes or the guarantees may be reviewed under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws. Under these laws, the notes or the guarantee could be voided, or claims in respect of the notes or the guarantees could be subordinated to the issuer’s or the applicable subsidiary guarantor’s other debt, if, among other things, the issuer or such subsidiary guarantor, at the time it issued the notes or entered into the guarantee:

• received less than reasonably equivalent value or fair consideration for issuing the notes or entering into the guarantee; and

• either:

• was insolvent or rendered insolvent by reason of issuing the notes or entering into the guarantee; or

• was engaged in a business or transaction for which the issuer’s or such subsidiary guarantor’s remaining assets constituted unreasonably small capital; or

• intended to incur, or believed that the issuer or such subsidiary guarantor would incur, debts or contingent liabilities beyond the issuer’s or such subsidiary guarantor’s ability to pay such debts or contingent liabilities as they become due.

In addition, any payment by the issuer or a subsidiary guarantor pursuant to the notes or the guarantees, as the case may be, could be voided and required to be returned to the issuer or such subsidiary guarantor, or to a fund for the benefit of the creditors of the issuer or such subsidiary guarantor.

If a guarantee were voided as a fraudulent conveyance or held unenforceable for any other reason, holders of the notes would be solely creditors of the issuer and creditors of our other subsidiaries that have validly guaranteed the notes. The notes then would be effectively subordinated to all obligations of the subsidiary whose guarantee was voided.

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, the issuer or the subsidiary guarantor would be considered insolvent if:

• the sum of the issuer’s or such subsidiary guarantor’s debts, including contingent liabilities, were greater than the fair saleable value of all of the issuer’s or such subsidiary guarantor’s assets; or

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• if the present fair saleable value of the issuer’s or such subsidiary guarantor’s assets were less than the amount that would be required to pay the issuer’s or such subsidiary guarantor’s probable liability on the issuer’s or such subsidiary guarantor’s existing debts, including contingent liabilities, as they become absolute and mature; or

• the issuer or such subsidiary guarantor could not pay its debts or contingent liabilities as they become due.

To the extent that the claims of the holders of the notes against the issuer or any subsidiary guarantor were subordinated in favor of other creditors of the issuer or such subsidiary guarantor, such other creditors would be entitled to be paid in full before any payment could be made on these notes or the guarantees. If one or more of the guarantees is voided or subordinated, we cannot assure you that after providing for all prior claims, there would be sufficient assets remaining to satisfy the claims of the holders of these notes.

Based upon financial and other information, we believe that the notes and the guarantees are being incurred for proper purposes and in good faith and that the issuer and each subsidiary guarantor is solvent and will continue to be solvent after this exchange offer is completed, will have sufficient capital for carrying on business after such issuance and will be able to pay debts as they mature. There can be no assurance, however, as to what standard a court would apply in making such determinations or that a court would agree with our conclusions in this regard.

Risks Relating to Our Company, Our Industry and the Industries We Serve

Our operating results are significantly affected by egg, potato and cheese market prices and the prices of other raw materials, such as grain, which can fluctuate widely.

Our operating results are significantly affected by egg, potato and cheese prices and the prices of corn and soybean meal, which are the primary feedstock used in our internal production of eggs. For example, for the year ended December 31, 2002, costs of eggs purchased from third-party suppliers and corn and soybean meal fed to our internal flocks were approximately $237.0 million, which represented 46% of total cost of sales for the egg products division. A majority of this amount consisted of purchases of eggs from third-party suppliers.

Eggs, corn and soybean meal are each commodities that are subject to significant price fluctuations due to market conditions. For illustrative purposes, our yearly average cost of eggs, corn and soybean meal for the past ten years is set forth below:

	1993		1994		1995		1996		1997		1998		1999		2000		2001		2002
	(in dollars)
Liquid whole eggs (per pound)	$	0.38	$	0.35	$	0.36	$	0.50	$	0.43	$	0.38	$	0.31	$	0.30	$	0.30	$	0.31
Corn (per bushel)		2.39		2.50		2.81		3.68		2.75		2.38		2.11		2.11		2.10		2.28
Soybean meal (per ton)		196		180		181		240		246		158		139		169		163		166

In general, the pricing of eggs is affected by an inelasticity of supply and demand, in connection with which small increases in production or decreases in demand can have a large effect on prices. Our operating profit has historically been adversely affected when egg and grain prices rise. In addition, our operating profit has historically been negatively impacted during extended periods of low egg prices. For example, during 2000 the operating profits for our lower value-added egg products sold mostly to industrial ingredient customers declined by approximately $14.0 million due, in part, to a decline in egg prices to a fifteen year low in mid 2000. This resulted in a decline in operating profit for the egg products division as a whole, as the growth in sales and earnings of our higher value-added products was insufficient to fully offset this decline. Egg prices have experienced an upward trend since 2002 and have risen to historical highs in late 2003 and early 2004. We

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cannot assure you that changes in the price of eggs, corn or soybean meal will not have a material adverse affect on our business, prospects, results of operations or financial condition. We also can experience similar negative effects on our results of operations because of increases in the price of potatoes and cheese. Although we can take steps to mitigate the effects of changes to our raw material costs, fluctuations in prices are outside of our control. For a description of our risk management strategy designed to reduce the impacts of changes in these commodity prices, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commodity Risk Management” and “Business—Egg Products Division—Commodity Risk Management.”

We produce and distribute food products that are susceptible to microbial contamination.

Many of our food products, particularly egg products, are vulnerable to contamination by disease producing organisms, or pathogens, contained in food, such as Listeria monocytogenes and Salmonella enteritidis. These pathogens are generally found in the environment and as a result, there is a risk that they will be present in our processed food products. The risk may be controlled, but may not be eliminated, by adherence to good manufacturing practices and finished product testing. Also, products purchased from others for repacking or distribution may contain contaminants that may be inadvertently redistributed by us. Once contaminated products have been shipped for distribution, illness and death may result if the pathogens are not eliminated by processing at the foodservice or consumer level. In 2000, our refrigerated distribution division recalled certain cheese products manufactured for us by a third party due to a possible listeria contamination. Even an inadvertent shipment of adulterated products is a violation of law and may lead to an increased risk of exposure to product liability claims, as discussed below, product recalls and increased scrutiny by federal and state regulatory agencies and may have a material adverse effect on our reputation, business, prospects, results of operations and financial condition. See “Business—Food Safety.”

As a result of selling food products, we face the risk of exposure to product liability claims.

We face the risk of exposure to product liability claims and adverse public relations in the event that our quality control procedures fail and the consumption of our products cause injury or illness. If a product liability claim is successful, our insurance may not be adequate to cover all liabilities we may incur, and we may not be able to continue to maintain such insurance, or obtain comparable insurance at a reasonable cost, if at all. We generally seek contractual indemnification and insurance coverage from parties supplying us products, but this indemnification or insurance coverage is limited by the creditworthiness of the indemnifying party, and their insurance carriers, if any, as well as the insured limits of any insurance provided by suppliers. If we do not have adequate insurance or contractual indemnification available, product liability claims relating to defective products could have a material adverse effect on our business reputation and earnings. In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could have a material adverse effect on our reputation with existing and potential customers and on our business, prospects, results of operations and financial condition. See “Business—Food Safety.”

A decline in egg consumption or in the consumption of processed food products would have a material adverse effect on our net sales and results of operations.

For the twelve months ended September 30, 2003, the egg products division represented approximately 69% and 72% of the net sales and operating profit of our three divisions, respectively. Per capita consumption of eggs declined from the early 1980s through the early 1990s due, in part, to public health and safety concerns regarding blood cholesterol levels and bacterial contamination from eggs. While egg consumption has experienced an upward trend over the past several years, there is no assurance that the consumption of eggs will not decline again. Adverse publicity relating to health concerns and the nutritional value of eggs and egg products could adversely affect demand for our processed egg products, which would have a material adverse effect on our business, prospects, results of operations and financial condition. In addition, as almost all of our operations

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consist of the production and distribution of processed food products, a change in consumer preferences relating to processed food products or in consumer perceptions regarding the nutritional value of processed food products could adversely affect demand, which would have a material adverse effect on our business, prospects, results of operations and financial condition.

The segments of the food industry in which we operate are highly competitive, and our inability to compete successfully could adversely affect our business, prospects, results of operations and financial condition.

Competition in each of the segments of the food industry within which we operate is intense. In particular, we compete with major companies such as Cargill Incorporated, Kraft Foods, Inc. and ConAgra Foods. Each of these companies has substantially greater financial resources, name recognition, research and development, marketing and human resources than we have. In addition, our competitors may succeed in developing new or enhanced products which are better than our products. These companies may also prove to be more successful than we are in marketing and selling these products. We cannot assure you that we will be able to compete successfully with any or all of these companies. Increased competition against any of our products could result in price reduction, reduced margins and loss of market share, which could negatively affect our business, prospects, results of operations and financial condition.

Our largest customers have historically accounted for a significant portion of our net sales volume. Accordingly, our business may be adversely affected by the loss of, or reduced purchases by, one or more of our large customers.

For the twelve months ended September 30, 2003, the egg products division sales to Sysco and U.S. Foodservice accounted for approximately 16% and 18% of the egg products division’s net sales volume, respectively, and sales to the egg products division’s top ten customers in the aggregate accounted for approximately 50% of the egg products division’s total sales volume. For the twelve months ended September 30, 2003, our potato products division sales to Sysco and U.S. Foodservice accounted for approximately 25% and 21%, respectively, of the potato products division’s net sales volume, and sales to the top ten customers in the aggregate accounted for approximately 67% of the potato products division’s total sales volume. For the twelve months ended September 30, 2003, our refrigerated distribution division sales to SUPERVALU and its affiliates accounted for approximately 43% of the refrigerated distribution division’s net sales volume. If, for any reason, one of our key customers were to purchase significantly less of our products in the future or were to terminate its purchases from us, and we are not able to sell our products to new customers at comparable or greater levels, it could have a material adverse effect on our business, prospects, financial condition and results of operations. For more information, see the “Customers” section for each of our divisions in “Business.”

Our business relies on patents and trademarks. The loss or expiration of a patent, whether licensed or owned, or the loss of any trademark could negatively impact our ability to produce and sell the products associated with such patent or trademark, which could have a material adverse effect on our sales volume and net income.

We rely on patents, trademarks, trade secrets and other intellectual property in our business. In 1988, we obtained an exclusive license to use patented processes developed and owned by North Carolina State University involving the ultrapasteurization of liquid eggs. Four of the five patents licensed to us under this license expire 2006 and are used in the production of ESL liquid egg products. Our license to use each of these patents will continue until the expiration of the patents. In addition to some of our competitors already using these patented processes in violation of our rights under the license, we believe additional parties may begin to produce and market processed egg products that are similar to ours when the licensed patents expire. Moreover, our competitors may develop and use technology in the production and development of liquid egg products that does not violate the patents that we license.

We have been engaged in extensive legal proceedings, along with the owner of the licensed patents, against some of the parties we believe are currently infringing on the licensed patents. See “Business—Legal Proceedings” for a summary of these proceedings.

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We also own several registered and unregistered trademarks that are used in the marketing and sale of our products. We have invested a substantial amount of money in promoting our trademarked brands. However, the degree of protection that these trademarks afford us is unknown.

We may not have the resources necessary to engage in actions to prevent infringement of our trademarks or the patents that we license. We cannot be certain that steps we have taken to protect our intellectual property rights will be adequate or that third parties will not infringe or misappropriate our intellectual property rights. Any such infringement or misappropriation or the termination of the patent license, or the expiration, lapsing, or invalidation of the licensed patents, our trademarks or other intellectual property could have a material adverse effect on our business, prospects, results of operations and financial condition. For more information, see “Business—Proprietary Technologies and Trademarks.”

Government regulation could increase our costs of production and increase our legal and regulatory expenses.

The manufacture, processing, packaging, storage, distribution and labeling of food products are subject to extensive federal, state and local regulation. We are regulated by the Food and Drug Administration, the FDA, the United States Department of Agriculture, or the USDA, and various state and local health and agricultural agencies. Public health concerns about animal feed could lead to modified regulations regarding hen feed. Such regulatory changes could require us to replace ingredients we currently use in feeding our internal flocks with more expensive alternatives. As a result, our egg production costs could increase, adversely affecting our results of operations and financial position. In addition, some of our facilities are subject to continuous on-site inspections. Applicable statutes and regulations governing food products include “standards of identity” for the content of specific types of foods, nutritional labeling and serving size requirements and “good manufacturing practices” with respect to production processes. In addition, our production and distribution facilities are subject to various federal, state and local environmental and workplace regulations. Failure to comply with all applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures, and criminal sanctions, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, compliance with current or future laws or regulations could require us to make material expenditures or otherwise adversely affect the way we operate our business, our prospects, results of operations and financial condition.

We may incur unexpected costs associated with compliance with environmental regulations.

We are subject to federal, state, and local environmental requirements, including those governing discharges to air and water, the management of hazardous substances, the disposal of solid and hazardous wastes, and the remediation of contamination. If we do not fully comply with environmental regulations, or if a release of hazardous substances occurs at or from one of our facilities, we may be subject to penalties and/or held liable for the cost of remedying the condition. For example, in 2000, 2002 and 2003, we were required to upgrade the wastewater treatment systems at three of our facilities and in 2003 we paid fines in connection with regulatory noncompliance relating to one of the facilities. We may be required to upgrade the systems at other facilities in the future. The operational and financial effects associated with compliance with the variety of environmental regulations we are subject to could require us to make material expenditures or otherwise adversely affect the way we operate our business and our prospects, results of operations and financial condition. See “Business—Environmental Regulation.”

Extreme weather conditions, disease and pests could harm our business.

All of our business activities are subject to a variety of agricultural risks. Unusual weather conditions, disease and pests can materially and adversely affect the quality and quantity of the food products we produce and distribute. There can be no assurance that these factors will not affect a substantial portion of our production facilities in any year and have a material adverse effect on our business, prospects, results of operations or financial condition.

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The segments of the food industry in which we compete are labor intensive, and if we cannot attract and retain qualified employees, we may not be able to implement our operating strategies.

The segments of the food industry in which we compete are labor intensive. Some of our operations have experienced a high rate of employee turnover and could continue to experience high turnover in the future. Labor shortages, the inability to hire or retain qualified employees or increased labor costs could have a material adverse effect on our ability to control expenses and efficiently conduct our operations. We cannot assure you that we will be able to continue to hire and retain the sufficiently skilled labor force necessary to operate efficiently and to support our operating strategies, that we will continue to experience favorable labor relations or that our labor expenses will not increase as a result of a continuing shortage in the supply of personnel.

Strikes, work stoppages and slowdowns could negatively affect our results of operations.

We currently participate in a union contract which extends through December 31, 2007, that covers, as of December 31, 2003, 183 employees of our potato products division, constituting approximately 72.1% of the division’s employees and 4.8% of all our 3,806 employees. We cannot assure you that our relations with the unionized portion of our workforce will remain positive or that such employees will not initiate a strike, work stoppage or slowdown in the future. In the event of such an action, our business, prospects, results of operations and financial condition could be adversely affected and we cannot assure you that we would be able to adequately meet the needs of our customers utilizing our remaining workforce. In addition, we cannot assure you that we would not have similar actions with our non-unionized workforce or that our non-unionized workforce will not become unionized in the future.

Our industry and the sales of our products are subject to seasonal variations and, as a result, our quarterly operating results may fluctuate.

Our quarterly operating results are affected by the seasonal fluctuations of our net sales and operating profits. Shell eggs prices typically rise seasonally in the first and fourth quarters of the year due to increased demand during holiday periods. Consequently, we generally experience higher net sales from our egg products division in our first and fourth quarters. Operating profits from the potato products division are less seasonal, but tend to be higher in the second half of the year, coinciding with the potato harvest. Our refrigerated distribution division typically experiences higher net sales and operating profits in the fourth quarter as a result of increasing consumer demand during the holiday season. As a result of these seasonal and quarterly fluctuations, we believe that comparisons of our sales and operating results between different quarters within a single fiscal year are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of our future performance.

Our business operations could be significantly disrupted if we lost members of our management team.

Our success depends to a significant degree upon the continued contributions of our executive officers and key employees, both individually and as a group. Our future performance will be substantially dependent on our ability to retain and motivate them. The loss of the services of any of our executive officers or key employees, particularly our president and chief executive officer, Gregg A. Ostrander, our chief operating officer, James D. Clarkson, and our executive vice president and chief financial officer, John D. Reedy, could prevent us from executing our business strategy. See “Management—Directors, Executive Officers and Key Employees.”

Pressure from animal rights groups regarding the treatment of animals may subject us to additional costs to conform our practices to comply with these developing standards or subject us to marketing costs to defend challenges to our current practices and protect our image with our customers.

Many of our customers are facing pressure from animal rights groups, such as People for the Ethical Treatment of Animals, or PETA, to require that any companies that supply them with food products operate their business in a manner that treats animals in conformity with certain standards developed by these animal rights

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groups. As a result, we are facing increasing pressure from some of our largest customers to change our operating procedures with respect to our flock of 13.4 million hens to meet some or all of these developing treatment standards. The treatment standards would, among other things, require that we provide increased cage space for our hens, stop beak trimming and stop forced molting (the act of putting birds into a regeneration cycle). Changing our procedures and infrastructure to conform to these guidelines would add significant additional costs to our internal production of eggs, including cost increases from housing and feeding the increased flock population resulting from the termination of molting practices, and the cost for us to purchase eggs from our third-party suppliers. While these increased costs have traditionally been passed on to our customers who required us to meet these standards, we cannot assure you that we can continue to pass on these costs in the future.

Under a provision of the State of Nebraska’s constitution, we may be required to divest real property we hold in that state, which could subject us to prolonged litigation and have a material adverse effect on our business, prospects, financial condition and results of operations.

In the twelve months ended September 30, 2003, approximately 24% of our total shell egg requirements were met by the Nebraska operations of our egg products division and approximately 70% of our producing hens were located in Nebraska. A provision of the constitution of the State of Nebraska generally prohibits corporations from engaging in farming or ranching in Nebraska. Although the constitutional provision contains an exemption for agricultural land operated by a corporation for the purpose of raising poultry, the Attorney General of Nebraska has, in written opinions, taken the position that facilities devoted primarily to the production of eggs do not fall within such exemption and therefore remain subject to the restrictions contained in the constitutional provision. The constitution empowers the Attorney General of Nebraska, or if the Attorney General fails to act, any citizen of Nebraska, to obtain a court order to, among other things, force a divestiture of land held in violation of this constitutional provision. If land subject to such a court order is not divested within a two-year period, the constitutional provision directs the court to declare the land escheated, or forfeited, to the State of Nebraska. Although we believe our egg production facilities in Nebraska are part of integrated facilities for the production, processing and distribution of egg products and therefore we believe they are used for non-farming and non-ranching purposes, our operations in Nebraska may be subject to the constitutional provision. Although we are not currently aware of any proceedings under this constitutional provision pending or threatened against us, we cannot assure you that this will continue to be the case. In the event we are forced to divest our egg production operations in Nebraska or become involved in prolonged litigation or other proceedings relating to a possible divestiture, our business, prospects, results of operations and financial condition could be materially adversely affected. For more information, see “Business—Government Regulation.”

The interests of the issuer’s controlling stockholder could conflict with those of the holders of the notes.

The issuer is a wholly owned subsidiary of Holdings. Holdings is a corporation wholly owned by MF Investors, whose members include affiliates of Thomas H. Lee Partners, L.P. and certain members of our senior management. Affiliates of Thomas H. Lee Partners, L.P. own approximately 90% of MF Investors’ issued and outstanding units. MF Investors has the ability to elect all of the members of the issuer’s and each subsidiary guarantor’s board of directors, appoint new management and approve any action requiring the approval of the issuer’s or any subsidiary guarantor’s stockholders. The directors have the authority to make decisions affecting our capital structure, including the issuance of additional indebtedness and the declaration of dividends. In addition, transactions may be pursued that could enhance their equity investment while involving risks to your interests. There can be no assurance that the interests of our controlling stockholders will not conflict with the holders of the notes.

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THE TRANSACTIONS

On October 10, 2003, we entered into a merger agreement with affiliates of Thomas H. Lee Partners, L.P., M-Foods Holdings, our former parent, and the shareholders of M-Foods Holdings, pursuant to which affiliates of Thomas H. Lee Partners, L.P., and certain members of our senior management acquired us for approximately $1.055 billion in cash, subject to certain adjustments.

On October 20, 2003, Thomas H. Lee Partners, L.P., through one of its affiliates commenced a tender offer and consent solicitation to repurchase all of Michael Foods’ then outstanding 11 ³/4% senior subordinated notes due 2011 and solicit consents from the holders of those notes to amend the indenture governing those notes to eliminate substantially all of the restrictive covenants and effect certain other amendments to that indenture. Approximately 99.98% of the 11 ³/4% senior subordinated notes due 2011 were tendered into the tender offer and consent solicitation, and we received the requisite number of consents to effect the proposed amendments to the indenture.

Concurrently with the closing of the acquisition, Michael Foods entered into (i) a senior secured credit facility providing for aggregate borrowings of up to $595.0 million consisting of a revolving credit facility of $100.0 million and a term loan facility of $495.0 million and (ii) a senior unsecured term loan facility providing for $135.0 million in term loans. See “Description of Credit Facilities.”

To partially finance the purchase price for the acquisition, affiliates of Thomas H. Lee Partners, L.P. invested $290.0 million and certain members of senior management made an equity investment of $33.0 million. These funds, together with borrowings under our senior credit facility, the borrowings under our senior unsecured term loan facility and the proceeds from the offering of the old notes, were used to pay all amounts due to the equity holders of M-Foods Holdings under the terms of the merger agreement, to repay indebtedness under Michael Foods’ then existing senior credit facility, to repurchase Michael Foods’ then outstanding 11 ³/4% senior subordinated notes due 2011 pursuant to the tender offer and consent solicitation and to pay the related fees and expenses.

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THE EXCHANGE OFFER

Purpose and Effect

We issued the old notes on November 20, 2003, in a private placement to a limited number of qualified institutional buyers, as defined under the Securities Act, and to a limited number of persons outside the United States. In connection with this original issuance, we entered into an indenture and a registration rights agreement. The registration rights agreement requires that we file a registration statement under the Securities Act with respect to the registered notes to be issued in the exchange offer and, upon the effectiveness of the registration statement, offer to you the opportunity to exchange your old notes for a like principal amount of registered notes. Except as set forth below, these registered notes will be issued without a restrictive legend and we believe, may be reoffered and resold by you without registration under the Securities Act. After we complete the exchange offer, our obligations with respect to the registration of the old notes and the registered notes will terminate, except as provided in the last paragraph of this section. Copies of the indenture relating to the notes and the registration rights agreement have been filed as exhibits to the registration statement on Form S-4 of which this prospectus forms a part.

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties unrelated to us, we believe that the registered notes issued to you in the exchange offer may be offered for resale, resold and otherwise transferred by you, without compliance with the registration and prospectus delivery provisions of the Securities Act, unless you are a broker-dealer that receives registered notes in exchange for old notes acquired by you as a result of market-making or other trading activities. This interpretation, however, is based on your representation to us that:

• the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business;

• you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and

• you have no arrangement or understanding with any person to participate in the distribution of the registered notes to be issued to you in the exchange offer.

If you have any of the disqualifications described above or cannot make any of the representations set forth above, you may not rely on this interpretation by the staff of the SEC referred to above. Under those circumstances, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a sale, transfer or other disposition of any notes unless you are able to utilize an applicable exemption from all of those requirements. Each broker-dealer that receives registered notes for its own account in exchange for old note where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of those registered notes. See “Plan of Distribution.”

If you will not receive freely tradeable registered notes in the exchange offer or are not eligible to participate in the exchange offer, you may elect to have your old notes registered in a “shelf” registration statement on an appropriate form pursuant to Rule 415 under the Securities Act. If we are obligated to file a shelf registration statement, we will be required to keep the shelf registration statement effective until the earlier of (a) the time when the securities covered by the shelf registration statement may be sold pursuant to Rule 144, (b) two years from the date the securities were originally issued or (c) the date on which all the securities registered under the shelf registration statement are disposed in accordance with the shelf registration statement. Other than as set forth in this paragraph, you will not have the right to require us to register your old notes under the Securities Act. See “—Procedures for Tendering.”

Consequences of Failure to Exchange

After we complete the exchange offer, if you have not tendered your old notes, you will not have any further registration rights, except as set forth above. Your old notes may continue to be subject to certain restrictions on transfer. Therefore, the liquidity of the market for your old notes could be adversely affected upon completion of the exchange offer if you do not participate in the exchange offer.

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Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all old notes validly tendered and not withdrawn prior to the time of expiration. We will issue a principal amount of registered notes in exchange for the principal amount of old notes accepted in the exchange offer. You may tender some or all of your old notes pursuant to the exchange offer. However, old notes may be tendered only in integral multiples of $1,000 principal amount.

The form and terms of the registered notes are substantially the same as the form and terms of the old notes, except that the registered notes to be issued in the exchange offer have been registered under the Securities Act and will not bear legends restricting their transfer. The registered notes will be issued pursuant to, and entitled to the benefits of, the indenture which governs the old notes. The registered notes and old notes will be deemed a single issue of securities under the indenture.

As of the date of this prospectus, $150.0 million aggregate principal amount of old notes was outstanding. This prospectus, together with the letter of transmittal, is being sent to all registered holders and to others believed to have beneficial interests in the old notes. We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC promulgated under the Exchange Act.

We will be deemed to have accepted validly tendered old notes when, as, and if we have given oral or written notice of our acceptance to the exchange agent. The exchange agent will act as our agent for the tendering holders for the purpose of receiving the registered notes from us. If we do not accept any tendered old notes because of an invalid tender or the failure of any conditions to the exchange offer to be satisfied, we will return the unaccepted old notes, without expense, to the tendering holder as promptly after the time of expiration. For the conditions of the exchange offer see “—Conditions.”

You will not be required to pay brokerage commissions or fees or, except as set forth below under “—Transfer Taxes,” transfer taxes with respect to the exchange of your old notes in the exchange offer. We will pay all charges and expenses, other than certain applicable taxes, in connection with the exchange offer. See “—Fees and Expenses” below.

Expiration; Amendments

The exchange offer will expire at         , New York City time, on             , 2004, unless we determine, in our sole discretion, to extend the exchange offer, in which case it will expire at the later date and time to which it is extended. We do not intend to extend the exchange offer, although we reserve the right to do so. If we do extend the exchange offer, we will give oral or written notice of the extension to the exchange agent and give each registered holder of old notes for which the exchange offer is being made notice by means of a press release or other public announcement of any extension prior to 9:00 a.m., New York City time, on the next business day after the scheduled expiration date of the exchange offer. We will not extend the exchange offer past             , 2004.

We also reserve the right, in our sole discretion,

• to delay accepting any old notes or, if any of the conditions set forth below under “—Conditions” have not been satisfied or waived, to terminate the exchange offer by giving oral or written notice of the delay or termination to the exchange agent; or

• to amend the terms of the exchange offer in any manner by complying with Rule 14e-1(d) under the Exchange Act of the extent that rule applies.

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We acknowledge and undertake to comply with the provisions of Rule 14e-1(c) under the Exchange Act, which require us to return the old notes surrendered for exchange promptly after the termination or withdrawal of the exchange offer. We will notify you promptly of any extension, termination or amendment.

Procedures for Tendering

Book-Entry Interests

The old notes were issued as global notes in fully registered form without interest coupons. Beneficial interests in the global notes, held by direct or indirect participants in DTC, are shown on, and transfers of these interests are effected only through, records maintained in book-entry form by DTC with respect to its participants.

If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration either:

• a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by that letter of transmittal, to the exchange agent at the address set forth on the cover page of the letter of transmittal; or

• a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.

In addition, in order to deliver old notes held in the form of book-entry interests:

• a timely confirmation of book-entry transfer of those old notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described below under “—Book-Entry Transfer” must be received by the exchange agent prior to the time of expiration; or

• you must comply with the guaranteed delivery procedures described below.

The method of delivery of old notes and the letter of transmittal and all other required documents to the exchange agent is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the time of expiration. You should not send the letter of transmittal or old notes to us. You may request your broker, dealer, commercial bank, trust company or other nominee to effect the above transactions for you.

Certificated Old Notes

Only registered holders of certificated old notes may tender those notes in the exchange offer. If your old notes are certificated notes and you wish to tender those notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration, a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other required documents, to the address set forth below under “—Exchange Agent.” In addition, in order to validly tender your certificated old notes:

• the certificates representing your old notes must be received by the exchange agent prior to the time of expiration; or

• you must comply with the guaranteed delivery procedures described below.

Procedures Applicable to All Holders

If you tender an old note and you do not withdraw the tender prior to the time of expiration, you will have made an agreement with us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

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If your old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time.

Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a financial institution, including most banks, savings and loan associations and brokerage houses, that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Program or the Stock Exchange Medallion Program, each an “eligible institution,” unless:

• old notes tendered in the exchange offer are tendered either:

• by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the holder’s letter of transmittal; or

• for the account of an eligible institution; and

• the box entitled “Special Registration Instructions” on the letter of transmittal has not been completed.

If the letter of transmittal is signed by a person other than you, your old notes must be endorsed or accompanied by a properly completed bond power and signed by you as your name appears on those old notes.

If the letter of transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, in this instance you must submit with the letter of transmittal proper evidence satisfactory to us of any such persons’s authority to act on your behalf.

We will determine, in our sole discretion, all questions regarding the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered old notes. This determination will be final and binding. We reserve the absolute right to reject any and all old notes not properly tendered or any old notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular old notes; provided, however, that, in the event we waive any condition of tender for any noteholder, we will waive that condition for all noteholders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties.

You must cure any defects or irregularities in connection with tenders of your old notes within the time period we determine unless we waive that defect or irregularity. Although we intend to notify you of defects or irregularities with respect to your tender of old notes, neither we, the exchange agent nor any other person will incur any liability for failure to give this notification. Your tender will not be deemed to have been made and your old notes will be returned to you if:

• you improperly tender your old notes;

• you have not cured any defects or irregularities in your tender; and

• we have not waived those defects, irregularities or improper tender.

Unless otherwise provided in the letter of transmittal, the exchange agent will return your old notes as soon as practicable following the expiration of the exchange offer.

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In addition, we reserve the right in our sole discretion to:

• purchase or make offers for, or offer registered notes for, any old notes that remain outstanding subsequent to the expiration of the exchange offer;

• terminate the exchange offer upon the failure of any condition to the exchange offer to be satisfied; and

• to the extent permitted by applicable law, purchase notes in the open market, in privately negotiated transactions or otherwise.

The terms of any of these purchases or offers could differ from the terms of the exchange offer. By tendering in the exchange offer, you will represent to us that, among other things:

• you are not an “affiliate” of the issuer, as defined in Rule 405 under the Securities Act;

• if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from the issuer and you comply with the prospectus delivery requirements of the Securities Act;

• the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business;

• you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and

• you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes to be acquired by you in the exchange offer.

In all cases, issuance of registered notes for old notes that are accepted for exchange in the exchange offer will be made only after timely receipt by the exchange agent of certificates for your old notes or a timely book-entry confirmation of your old notes into the exchange agent’s account at DTC, a properly completed and duly executed letter of transmittal and all other required documents. If any tendered old notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if old notes are submitted for a greater principal amount than you desire to exchange, the unaccepted or non-exchanged old notes, or old notes in substitution therefor, will be returned without expense to you. In addition, in the case of old notes, tendered by book-entry transfer into the exchange agent’s account at DTC pursuant to the book-entry transfer procedures described below, the non-exchanged old notes will be credited to your account maintained with DTC, as promptly as practicable after the expiration or termination of the exchange offer.

Guaranteed Delivery Procedures

If you desire to tender your old notes and your old notes are not immediately available or one of the situations described in the immediately preceding paragraph occurs, you may tender if:

• you tender through an eligible institution;

• on or prior to the time of expiration, the exchange agent receives from an eligible institution, a written or facsimile copy of a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us; and

• the certificates for all certificated old notes, in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

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The notice of guaranteed delivery may be sent by facsimile transmission, mail or hand delivery. The notice of guaranteed delivery must set forth:

• your name and address;

• the amount of old notes you are tendering; and

• a statement that your tender is being made by the notice of guaranteed delivery and that you guarantee that within three New York Stock Exchange trading days after the execution of the notice of guaranteed delivery, the eligible institution will deliver the following documents to the exchange agent:

• the certificates for all certificated old notes being tendered, in proper form for transfer or a book-entry confirmation of tender;

• a written or facsimile copy of the letter of transmittal, or a book-entry confirmation instead of the letter of transmittal; and

• any other documents required by the letter of transmittal.

Book-Entry Transfer

The exchange agent will establish accounts with respect to book-entry interests at DTC for purposes of the exchange offer promptly after the date of this prospectus. You must deliver your book-entry interest by book-entry transfer to the account maintained by the exchange agent at DTC for the exchange offer. Any financial institution that is a participant in DTC’s systems may make book-entry delivery of book-entry interests by causing DTC to transfer the book-entry interests into the relevant account of the exchange agent at DTC in accordance with DTC’s procedures for transfer.

If you are unable to:

• deliver a book-entry confirmation of book-entry delivery of your book-entry interests into the relevant account of the exchange agent at DTC; or

• deliver all other documents required by the letter of transmittal to the exchange agent prior to the time of expiration,

then you must tender your book-entry interests according to the guaranteed delivery procedures discussed above.

Withdrawal Rights

You may withdraw tenders of your old notes at any time prior to the time of expiration.

For your withdrawal to be effective, the exchange agent must receive a written or facsimile transmission notice of withdrawal at its address set forth below under “—Exchange Agent” prior to the time of expiration.

The notice of withdrawal must:

• state your name;

• identify the specific old notes to be withdrawn, including the certificate number or numbers and the principal amount of old notes to be withdrawn;

• be signed by you in the same manner as you signed the letter of transmittal when you tendered your old notes, including any required signature guarantees, or be accompanied by documents of transfer sufficient for the exchange agent to register the transfer of the old notes into your name; and

• specify the name in which the old notes are to be registered, if different from yours.

We will determine all questions regarding the validity, form and eligibility, including time of receipt, of withdrawal notices. Our determination will be final and binding on all parties. Any withdrawn tenders of old notes will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any old notes which have been tendered for exchange but which are not exchanged for any reason will be returned to you

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without cost as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn old notes may be retendered by following one of the procedures described under “—Procedures for Tendering” above at any time on or prior to the time of expiration.

Conditions

Notwithstanding any other provision of the exchange offer and subject to our obligations under the registration rights agreement, we will not be required to accept for exchange, or to issue registered notes in exchange for, any old notes in the exchange offer and may terminate or amend the exchange offer, if at any time before the acceptance of any old notes for exchange in the exchange offer any of the following events occur:

• any injunction, order or decree has been issued by any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer; or

• the exchange offer violates any applicable law, regulation or interpretation of the staff of the SEC.

These conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to them, subject to applicable law. We also may waive in whole or in part at any time and from time to time any particular condition to the exchange offer in our sole discretion. If we waive a condition, we may be required to extend the expiration of the exchange offer in order to comply with applicable securities laws. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of these rights, and these rights will be deemed ongoing rights which may be asserted at any time and from time to time (in the case of any condition involving governmental approvals necessary for the completion of the exchange offer) and at any time prior to the time of expiration (in the case of all other conditions).

In addition, we will not accept for exchange any old notes tendered, and no registered notes will be issued in exchange for any of those old notes, if at the time the old notes are tendered any stop order is threatened by the SEC or in effect with respect to the registration statement of which this prospectus is a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

The exchange offer is not conditioned on any minimum principal amount of old notes being tendered for exchange.

Exchange Agent

We have appointed Wells Fargo Bank Minnesota, National Association as exchange agent for the exchange offer. Questions, requests for assistance and requests for additional copies of the prospectus, the letter of transmittal and other related documents should be directed to the exchange agent addressed as follows:

By Hand, Regular, Registered or Certified Mail or Overnight Courier:

Wells Fargo Bank Minnesota, National Association

Corporate Trust Department

213 Court Street, Suite 703

Middletown, CT 06457

Attention: Joseph P. O’Donnell

By Facsimile:

Wells Fargo Bank Minnesota, National Association

Corporate Trust Department

Attention: Joseph P. O’Donnell

Fax No. 860-704-6219

For more information or confirmation by telephone please call 860-704-6217. Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand or by overnight delivery service.

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Fees and Expenses

We will not pay brokers, dealers or others soliciting acceptances of the exchange offer. The principal solicitation is being made by mail. Additional solicitations, however, may be made in person or by telephone by our officers and employees.

We will pay the cash expenses to be incurred in connection with the exchange offer.

Transfer Taxes

You will not be obligated to pay any transfer taxes in connection with a tender of your old notes for exchange unless you instruct us to register registered notes in the name of, or request that old notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder, in which event, the registered tendering holder will be responsible for the payment of any applicable transfer tax.

Accounting Treatment

We will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize the expense of the exchange offer and the unamortized expenses related to the issuance of the old notes over the term of the registered notes under generally accepted accounting principles.

32

USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the registered notes. In consideration for issuing the registered notes as contemplated in this prospectus, the issuer will receive, in exchange, an equal number of old notes in like principal amount. The form and terms of the registered notes are identical in all material respects to the form and terms of the old notes. The old notes surrendered in exchange for the registered notes will be retired and marked as cancelled and cannot be reissued.

CAPITALIZATION

The following table sets forth our unaudited cash and cash equivalents and our unaudited capitalization as of September 30, 2003 on an actual basis and on a pro forma basis giving effect to the disposition of our predecessor’s dairy products division, the application of the net after tax proceeds therefrom to repay debt under our predecessor’s then existing credit facility and the transactions. This table should be read in conjunction with “Use of Proceeds,” “Selected Historical Financial Data,” “Unaudited Pro Forma Condensed Consolidated Financial Statements,” our consolidated financial statements and related notes and other financial information appearing elsewhere in this prospectus.

	As of September 30, 2003
	Actual		Pro Forma
	(unaudited) (dollars in millions)
Cash and cash equivalents	$	25.3	$	—	(1)
Debt:
Current maturities of long-term debt	$	13.8	$	5.5	(2)
Revolving credit facility (3)		—		—
Term loans, excluding current maturities (4)		219.1		490.1
Senior unsecured term loan facility		—		135.0
Other, excluding current maturities		9.2		9.2
11 3/4% senior subordinated notes due 2011		200.0		—
Senior subordinated notes offered hereby		—		150.0
Total debt (5)		442.1		789.8
Total shareholder’s equity (6)		210.8		212.6
Total capitalization	$	652.9	$	1,002.4

(1) Reflects (i) $5.6 million in cash used to pay interest rate swap termination fees and accrued interest expense related to the early repayment of debt and subsequent interest rate swap with respect to the sale of the dairy products division and (ii) $19.7 million in cash on hand used to repay indebtedness under our predecessor’s then existing credit facility.

(2) Includes current maturities of $0.6 million of capital leases and $4.9 million of term loans.

(3) Assuming the completion of the acquisition and related financing transactions on September 30, 2003, on a pro forma basis, we would have had approximately $93.5 million of unused borrowing capacity under the revolving credit facility of our senior credit facility after taking into account $6.5 million of outstanding letters of credit.

(4) Reflects repayment of $146.7 million of indebtedness under our existing senior credit facility with $127.0 million of net after tax proceeds from the sale of our dairy products division and $19.7 million cash on hand and borrowings from our senior credit facility and our senior unsecured term loan facility.

(5) Excludes guarantees of payment of certain industrial revenue bonds in the amount of $6.4 million. For more information see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Guarantees.”

(6) Pro forma amount includes equity contribution of $297.8 million from management and our new equity investors net of deemed dividend of $85.2 million reflecting the residual interest retained by the continuing management investors in the merger.

33

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements have been derived by the application of pro forma adjustments to the historical consolidated financial statements of our predecessor (also named Michael Foods, Inc.) included elsewhere in this prospectus. The unaudited pro forma condensed consolidated balance sheet data gives effect to the disposition of the dairy products division, the application of the net after tax proceeds therefrom of $127.0 million to repay debt under our predecessor’s then existing credit facility and the transactions, including the offering of the old notes, as if they had all occurred on September 30, 2003. The unaudited pro forma condensed consolidated statements of operations data for the periods presented gives effect to the disposition of the dairy division, the application of $127.0 million to repay debt under our predecessor’s then existing credit facility, the offering of the old notes and the transactions as if they had been consummated on the first day of each of the periods presented. Assumptions underlying the pro forma adjustments are described in the accompanying notes which should be read in conjunction with these unaudited pro forma condensed consolidated financial statements.

The pro forma adjustments related to the purchase price allocation and financing of the acquisition are preliminary and based on information obtained to date and are subject to revision as additional information becomes available. The actual purchase accounting adjustments described in the accompanying notes will be recorded during the close of our year end 2003 financial records and may differ from those reflected in these unaudited pro forma condensed consolidated financial statements. Revisions to the preliminary purchase price allocation of the acquisition may have a significant impact on the pro forma amounts of total assets, total liabilities and shareholder’s equity, cost of sales, selling, general and administrative expenses, depreciation and amortization and interest expense.

The unaudited pro forma condensed consolidated financial statements should not be considered indicative of actual results that would have been achieved had the disposition of the dairy products division and the transactions been consummated on the date or for the periods indicated and do not purport to indicate consolidated balance sheet data or results of operations as of any future date or any future period.

The unaudited pro forma condensed consolidated financial statements also include adjustments, which are based upon preliminary estimates, to reflect the issuance of the notes and their interest rate plus amortization of estimated financing costs. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the information contained in “Selected Historical Financial Data,” “The Transactions,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes thereto appearing elsewhere in this prospectus.

34

Unaudited Pro Forma Condensed Consolidated Balance Sheet

At September 30, 2003

(in thousands)

	Actual		Dairy Products Division Sale Pro Forma Adjustments (8)			Combined		Transactions Pro Forma Adjustments (8)			Pro Forma
Current assets
Cash and equivalents	$	25,316	$	(5,638	)(1)	$	19,678	$	(19,678	)(9)	$	—
Accounts receivable, less allowances		106,162		—			106,162		—			106,162
Inventories		89,681		—			89,681		4,320	(10)		94,001
Prepaid expenses and other		10,921		—			10,921		27,966	(15)		38,887
Assets held for sale		58,909		(58,909	)(2)		—		—			—
Total current assets		290,989		(64,547	)		226,442		12,608			239,050
Property, plant and equipment		230,725		—			230,725		63,000	(10)		293,725
Other assets
Goodwill, net		336,094		—			336,094		233,452	(10)		569,546
Joint ventures and other assets		33,050		(3,286	)(3)		29,764		206,522	(11)		236,286
		369,144		(3,286	)		365,858		439,974			805,832
Total assets	$	890,858	$	(67,833	)	$	823,025	$	515,582		$	1,338,607
Current liabilities
Current maturities of long-term debt	$	13,841	$	—		$	13,841	$	(8,334	)(12)	$	5,507
Accounts payable		66,931		—			66,931		—			66,931
Accrued liabilities		115,841		(18,005	)(4)		97,836		(15,921	)(13)		81,915
Total current liabilities		196,613		(18,005	)		178,608		(24,255	)		154,353
Term loans, excluding current maturities		219,057		(127,036	)(5)		92,021		398,029	(12)		490,050
Senior unsecured term loan facility		—		—			—		135,000	(12)		135,000
Other debt, excluding current maturities		9,227		—			9,227		—			9,227
Senior subordinated notes		200,000		—			200,000		(50,000	)(12)		150,000
Deferred income taxes		55,127		1,560	(6)		56,687		105,544	(10)		162,231
Deferred compensation		—		—			—		25,182	(16)		25,182
Total shareholder’s equity		210,834		75,648	(7)		286,482		(73,918	)(14)		212,564
Total liabilities and shareholder’s equity	$	890,858	$	(67,833	)	$	823,025	$	515,582		$	1,338,607

The accompanying notes are an integral part of the unaudited

pro forma condensed consolidated financial statements.

35

Notes to the Unaudited Pro Forma

Condensed Consolidated Balance Sheet

(in thousands)

(1) Records cash used to pay interest rate swap termination fees and accrued interest expense related to the early repayment of debt and subsequent termination of interest rate swaps.

(2) Eliminates the assets of the dairy products division sold in the sale of that business.

(3) Records estimated write-off of deferred financing costs related to the early repayment of debt.

(4) Eliminates the dairy products division liability assumed in the transaction of $6,800, the reduction of income taxes payable for the tax benefit associated with the estimated loss on the early repayment of debt of approximately $5,600, the payment of accrued interest on the early repayment of debt of approximately $1,600 and the payment on interest rate swap liability due to the early repayment of debt of approximately $4,000.

(5) Records proceeds from the sale of the dairy products division and the use of such proceeds to repay outstanding borrowings. The proceeds related to the sale were approximately $155,000, of which approximately $42,600 was received directly by our predecessor for its portion of the sale proceeds and $84,400 received from M-Foods Holdings, Inc., the parent of our predecessor, as its share of proceeds reinvested in our predecessor, with the remaining $28,000 being paid directly to the shareholders as a dividend to fund tax obligations incurred from the dairy products division sale. The $127,000 of proceeds retained by our predecessor was used to repay outstanding principal balances under the predecessor’s senior credit facility.

(6) Reflects the reduction of deferred tax assets associated with the interest rate swap liability.

(7) Records the reinvestment by M-Foods Holdings, Inc. of $84,400 of proceeds from the sale, net of an estimated loss by our predecessor from its share of the proceeds and the loss related to the early retirement of debt totaling approximately $8,700, net of taxes.

(8) All of the financial estimates in connection with the dairy products division sale, the offering and the transactions are subject to post-closing adjustments and reconciliations.

(9) Records the net use of cash related to transactions and the offering.

(10) Reflects the write-up to fair value for the change in ownership for the transactions.

(11) Reflects the write-up of identifiable intangible assets of $205,900 for the change in ownership for the transactions, the recording of deferred financing costs of $23,700 capitalized for the senior subordinated notes and senior secured credit facility, net of the write-off of deferred financing costs related to the early repayment of debt of $7,800 and the removal of previously recorded trademarks totaling $13,300.

(12) Records the original notes of $150,000 and the senior credit facility of $495,000 ($4,950 included in current maturities), and the senior unsecured term loan facility of $135,000, net of the repayment of outstanding borrowings under the predecessor’s then existing 11 ³/4% senior subordinated notes due 2011 of $200,000 and our predecessor’s then existing credit facility of $105,300 ($13,300 included in current maturities), which represents the balance of the existing credit facility at September 30, 2003 of $232,300, net of the repayment of $127,000 from proceeds of the dairy products division disposition.

(13) Reflects the payment of accrued interest paid on the retirement of existing debt of $13,000, and the payment of existing interest rate swap liability due to the retirement of existing debt of approximately $2,900.

(14) Records the new equity investment of $297,800, net of a deemed dividend of $85,200 reflecting the residual interest retained by the continuing management investors in the transaction.

(15) Records estimated refundable income taxes as a result of the transaction.

(16) Records a new deferred compensation plan for certain members of management.

36

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the nine months ended September 30, 2003

(in thousands)

	Actual		Dairy Products Division Sale Pro Forma Adjustments (2)			Combined		Transactions Pro Forma Adjustments (5)			Pro Forma
Net sales	$	968,209	$	(144,667	)(1)	$	823,542	$	—		$	823,542
Cost of sales		800,753		(125,775	)(1)		674,978		656	(6)		675,634
Gross profit		167,456		(18,892	)		148,564		(656	)		147,908
Selling, general and administrative expenses		91,545		(6,598	)(1)		84,947		12,477	(7)		97,424
Operating profit		75,911		(12,294	)		63,617		(13,133	)		50,484
Interest expense, net		35,840		(7,188	)(3)		28,652		3,599	(8)		32,251
Earnings (loss) before income taxes		40,071		(5,106	)		34,965		(16,732	)		18,233
Income tax expense (benefit)		15,556		(1,965	)(4)		13,591		(5,860	)(4)		7,731
Net earnings (loss)	$	24,515	$	(3,141	)	$	21,374	$	(10,872	)	$	10,502

The accompanying notes are an integral part of the unaudited

pro forma condensed consolidated financial statements.

37

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2002

(in thousands)

	Actual		Dairy Products Division Sale Pro Forma Adjustments (2)			Combined		Transactions Pro Forma Adjustments (5)			Pro Forma
Net sales	$	1,168,160	$	(190,578	)(1)	$	977,582	$	—		$	977,582
Cost of sales		953,333		(172,089	)(1)		781,244		2,394	(6)		783,638
Gross profit		214,827		(18,489	)		196,338		(2,394	)		193,944
Selling, general and administrative expenses		116,444		(8,071	)(1)		108,373		17,441	(7)		125,814
Operating profit		98,383		(10,418	)		87,965		(19,835	)		68,130
Interest expense, net		50,179		(10,089	)(3)		40,090		3,571	(8)		43,661
Earnings (loss) before income taxes		48,204		(329	)		47,875		(23,406	)		24,469
Income tax expense (benefit)		18,543		(127	)(4)		18,416		(8,236	)(4)		10,180
Net earnings (loss)	$	29,661	$	(202	)	$	29,459	$	(15,170	)	$	14,289

The accompanying notes are an integral part of the unaudited

pro forma condensed consolidated financial statements.

38

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the twelve months ended September 30, 2003

(in thousands)

	Actual		Dairy Products Division Sale Pro Forma Adjustments (2)			Combined		Transactions Pro Forma Adjustments (5)			Pro Forma
Net sales	$	1,274,233	$	(187,518	)(1)	$	1,086,715	$	—		$	1,086,715
Cost of sales		1,051,447		(164,614	)(1)		886,833		1,393	(6)		888,226
Gross profit		222,786		(22,904	)		199,882		(1,393	)		198,489
Selling, general and administrative expenses		119,333		(8,481	)(1)		110,852		16,725	(7)		127,577
Operating profit		103,453		(14,423	)		89,030		(18,118	)		70,912
Interest expense, net		48,179		(10,210	)(3)		37,969		3,211	(8)		41,180
Earnings (loss) before income taxes		55,274		(4,213	)		51,061		(21,329	)		29,732
Income tax expense (benefit)		21,139		(1,623	)(4)		19,516		(7,436	)(4)		12,080
Net earnings (loss)	$	34,135	$	(2,590	)	$	31,545	$	(13,893	)	$	17,652

The accompanying notes are an integral part of the unaudited

pro forma condensed consolidated financial statements.

39

Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations

(in thousands)

(1) Eliminates the historical results of operations of the dairy products division.

(2) The loss related to the sale of the dairy products division and the loss associated with the early retirement of debt of approximately $8,700 have not been reflected, but will be recorded in the quarter ending December 31, 2003. All of the financial estimates in connection with the sale are subject to post-closing adjustments and reconciliations.

(3) Represents an estimated reduction in interest expense due to repayment of outstanding borrowings, on a pro forma basis, from proceeds received in connection with the sale of the dairy products division.

(4) Income tax expense reflects income taxes for the pro forma results on a stand-alone basis.

(5) All of the financial estimates in connection with the offering and the transactions are subject to post-closing adjustments and reconciliations.

(6) To reflect the adjustment for depreciation related to the new basis of property, plant and equipment.

(7) To reflect the following:

	Nine Months Ended September 30, 2003		Year Ended December 31, 2002		Twelve Months Ended September 30, 2003
Adjustment related to the new basis of property, plant and equipment	$	579	$	1,611	$	1,026
Adjustment to annual management fee		175		200		69
New deferred compensation plan expense		1,511		2,014		2,014
Amortization of identifiable intangible assets(a)		10,212		13,616		13,616
Net adjustment to selling, general and administrative expenses	$	12,477	$	17,441	$	16,725

(a) Reflects the estimated amortization expense of customer relationships intangible of approximately $205 million being amortized over 15 years.

(8) To adjust interest expense associated with the notes offered hereby, the senior credit facility, the senior unsecured term loan facility and to eliminate interest expense on the refinanced debt:

	Nine Months Ended September 30, 2003			Year Ended December 31, 2002			Twelve Months Ended September 30, 2003
Interest on term loan(a)	$	13,857		$	21,211		$	18,806
Interest on senior unsecured term loan facility(b)		5,700			7,472			6,816
Interest on 8.00% senior subordinated notes due 2013		9,000			12,000			12,000
Interest on revolving credit facility(a)		2			10			9
Commitment fee on revolving credit facility		375			499			499
Amortization on new deferred financing costs		2,230			2,973			2,973
Elimination of interest expense related to refinanced debt		(27,565	)		(40,594	)		(37,892	)
Net adjustment to interest expense	$	3,599		$	3,571		$	3,211

(a) Reflects borrowings under the senior credit facility at a rate of LIBOR plus 250 basis points.

(b) Reflects borrowings under the senior unsecured term loan facility at a rate of LIBOR plus 375 basis points.

The actual interest rates will vary from those used to compute the above adjustment of interest expense due to floating rates applicable to our senior credit facility and the senior unsecured term loan facility. The effect on pre-tax income of a  ¹/8% variance in these rates would be approximately $975 for an annual period.

40

SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth selected financial data for us. The selected historical consolidated statement of operations data and balance sheet data as of and for the fiscal years ended December 31, 1998, 1999 and 2000, the three months ended March 31, 2001, the nine months ended December 31, 2001 and the fiscal year ended December 31, 2002 have been derived from our audited consolidated financial statements. The unaudited historical condensed consolidated financial data as of and for the nine months ended September 30, 2002 and September 30, 2003, have been derived from our unaudited condensed consolidated financial statements. The unaudited consolidated financial statements as of and for the nine months ended September 30, 2002 and September 30, 2003, reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of our management, necessary for a fair presentation of our financial position, results of operations and cash flows as of and for the periods presented. The selected historical results included below and elsewhere in this document are not necessarily indicative of our future performance and results for the nine months ended September 30, 2003 are not necessarily indicative of our results of operations for the full year. The selected historical financial data for the periods indicated below includes the results of our dairy products division, which we sold on October 15, 2003.

The selected historical financial data presented below includes financial data of the 2001 predecessor and our predecessor, both of which were also named Michael Foods, Inc. In April 2001, we were acquired by an investor group comprised of members of senior management, two equity sponsors and affiliates of the Michael family. The financial data presented below for the 2001 predecessor relates to our company and its consolidated subsidiaries for the periods prior to that acquisition in 2001. Due to the acquisition in 2001, which was accounted for as a purchase, different bases of accounting have been used to prepare our predecessor’s and the 2001 predecessor’s consolidated financial statements. The acquisition resulted in additional interest expense for new indebtedness that our predecessor incurred and higher depreciation and amortization of fixed assets and other intangible assets recorded. The accompanying balance sheet and statements of operations data as of and for the three months ended March 31, 2001, and as of and for the fiscal years ended December 31, 1998, 1999 and 2000, of the 2001 predecessor were prepared from the historical books and records of the 2001 predecessor.

41

The selected historical financial data set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes and other financial information appearing elsewhere in this prospectus.

	2001 Predecessor												Predecessor
	Year Ended December 31,									Three Months Ended March 31, 2001			Nine Months Ended December 31, 2001			Year Ended December 31, 2002			Nine Months Ended September 30,
	1998			1999			2000												2002			2003
	(dollars in thousands)
Statement of Operations Data:
Net sales	$	1,020,484		$	1,053,272		$	1,080,601		$	275,627		$	885,642		$	1,168,160		$	862,136		$	968,209
Cost of sales		847,383			860,256			889,138			227,707			734,008			953,333			702,639			800,753
Gross profit		173,101			193,016			191,463			47,920			151,634			214,827			159,497			167,456
Selling, general and administrative expenses		93,548			106,686			104,657			27,376			87,484			116,444			88,656			91,545
Transaction expenses		—			—			—			11,050			—			—			—			—
Operating profit		79,553			86,330			86,806			9,494			64,150			98,383			70,841			75,911
Interest expense		10,136			11,664			13,206			3,293			42,335			50,179			37,840			35,840
Earnings before other expense and income taxes		69,417			74,666			73,600			6,201			21,815			48,204			33,001			40,071
Other expense (1)		—			—			—			15,513			—			—			—			—
Earnings (loss) before income taxes		69,417			74,666			73,600			(9,312	)		21,815			48,204			33,001			40,071
Income tax expense		29,160			30,610			28,890			(3,659	)		12,000			18,543			12,960			15,556
Net earnings (loss)	$	40,257		$	44,056		$	44,710		$	(5,653	)	$	9,815		$	29,661		$	20,041		$	24,515
Balance Sheet Data (at period end):
Working capital	$	61,297		$	51,764		$	78,628		$	73,459		$	65,477		$	59,145		$	76,771		$	94,376
Total assets		551,516			597,917			612,904			619,721			897,133			893,022			931,316			890,858
Long-term debt, including current maturities		166,107			178,534			198,809			192,200			553,094			511,389			546,360			442,125
Shareholder’s equity		244,149			264,599			258,733			257,151			152,990			179,326			172,804			210,834
Other Financial Data:
Depreciation and amortization		35,804			42,564			47,983			12,535			46,945			54,258			40,893			41,286
Capital expenditures		64,777			74,125			37,373			10,837			23,299			27,394			19,242			22,802
Segment Data:
Net sales
Egg products division	$	607,688		$	620,719		$	637,355		$	163,529		$	482,324		$	657,824		$	483,018		$	575,570
Potato products division		52,345			57,353			60,731			15,585			51,268			72,170			52,774			54,943
Refrigerated distribution division		221,586			230,335			241,114			61,185			201,496			247,588			178,617			193,029
Dairy products division		138,865			144,865			141,401			35,328			150,554			190,578			147,727			144,667
Total net sales	$	1,020,484		$	1,053,272		$	1,080,601		$	275,627		$	885,642		$	1,168,160		$	862,136		$	968,209
Operating profit
Egg products division	$	69,295		$	73,531		$	67,658		$	12,915		$	48,648		$	71,717		$	52,712		$	51,119
Potato products division		3,890			6,751			7,650			1,688			6,639			10,832			7,551			6,268
Refrigerated distribution division		7,288			10,656			16,001			3,639			4,947			13,744			8,306			12,557
Dairy products division		6,748			3,750			1,322			3,958			7,885			9,918			7,914			11,918
Corporate division		(7,668	)		(8,358	)		(5,825	)		(12,706	)		(3,969	)		(7,828	)		(5,642	)		(5,951	)
Total operating profit	$	79,553		$	86,330		$	86,806		$	9,494		$	64,150		$	98,383		$	70,841		$	75,911

(1) Loss associated with the early retirement of debt in connection with our acquisition in 2001.

42

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the notes to those statements and other financial information appearing elsewhere in this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those indicated in forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

General

Overview. We are a leading producer and distributor of specialty egg and refrigerated potato products to the foodservice, retail and industrial ingredient markets. We also distribute refrigerated food items, primarily cheese and other dairy products, to the retail grocery market predominantly in the central United States. We focus our growth efforts on the specialty segments within our food categories and strive to be a market leader in product innovation and low-cost production. Our strategic focus on value-added processing of food products is designed to capitalize on key food industry trends, such as the desire for improved safety and convenience, reduced labor and waste, as well as growth of food consumption away from home. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers, which include food service distributors, major restaurant chains and industrial ingredient companies. In recent years, our net sales and operating profit have each increased as a result of our focus on value-added products combined with favorable food industry trends.

Capital Expenditures. From 1998 through 2003, we invested approximately $226 million in capital expenditures, excluding capital expenditures made in our recently sold dairy products division. Of this amount, approximately $125 million was used for growth investments to expand our manufacturing capacity for value-added egg products, to upgrade our potato products operations, to improve and expand our distribution centers, to install a new company-wide management information system and to otherwise position ourselves for future growth. These expenditures included the installation of new precooked egg production lines, a new dried egg facility, automated packaging machines and quality control systems. We expect these investments to improve manufacturing efficiencies, customer service and product quality.

Acquisitions/Joint Ventures. We have grown both organically and through acquisitions. Since 1988, we have completed 17 acquisitions and three joint ventures, including the $106 million acquisition of Papetti’s in 1997. The acquisition of Papetti’s significantly increased our egg products division’s market share, scale, geographic scope and product offerings. We have focused in recent years on making small acquisitions that expand our current product offerings and/or geographic scope and broaden our technological expertise. For example, in August 2002, we bought the egg products division of Canadian Inovatech, Inc., one of the largest providers of processed egg products in Canada, which greatly expanded our presence in international markets, particularly in the industrial ingredients market.

Commodity Risk Management. Our principal exposure to market risks that may adversely affect our results of operations and financial condition include changes in future commodity prices and interest rates. We seek to minimize or manage these market risks through normal operating and financing activities and through the use of commodity contracts and interest rate swap agreements, where practicable. We believe that the use of these instruments to manage risk is in our best interest. We do not trade or use instruments with the objective of earning financial gains on commodity prices or interest rate fluctuations, nor do we use instruments where there are not underlying exposures. See “—Commodity Risk Management.”

Sale of Dairy Products Division. In October 2003, we completed the sale of our dairy products division to Dean Foods for approximately $155.0 million from which we received $127.0 million in net after tax proceeds. In accordance with a transition services agreement, we will be compensated for certain transition services we

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provide to the buyer for a period currently anticipated to be twelve to eighteen months after the closing of the transaction. These transition services include services such as information technology, sales, customer service and procurement. We determined that the sale did not meet the accounting criteria for “discontinued operations,” but did meet the accounting criteria for classification as “held for sale.” Accordingly, the related assets and liabilities of the dairy products division were classified as current assets and liabilities held for sale at September 30, 2003, and related depreciation and amortization of the assets ceased beginning in June 2003. The results of operations of the dairy products division are included in our statements of operations through September 30, 2003.

Purchase Accounting Effects. Our acquisition by MF Investors was accounted for using the purchase method of accounting. As a result, the acquisition will prospectively affect our results of operations in certain significant respects. The aggregate merger consideration, including the assumption of liabilities and estimated transaction expenses, of approximately $680.4 million will be allocated to the tangible and intangible assets acquired and liabilities assumed by us based upon their respective fair values as of the date of the acquisition. The allocation of the purchase price of the assets acquired in the acquisition will result in a significant increase in our annual depreciation and amortization expense. In addition, due to the effects of the increased borrowings to finance the acquisition, our interest expense will increase significantly in the periods following the acquisition. On a pro forma basis, giving effect to the transactions, our interest expense would have been $43.8 million for the twelve months ended September 30, 2003.

Results of Operations

The following table summarizes the historical results of our divisional operations and such data as a percentage of total net sales for the periods indicated. The consolidated financial data as of and for the fiscal year ended December 31, 2000, the three months ended March 31, 2001, the nine months ended December 31, 2001 and the fiscal year ended December 31, 2002 have been derived from our audited consolidated financial statements. The unaudited historical condensed consolidated financial data as of and for the nine months ended September 30, 2002 and September 30, 2003, have been derived from our unaudited condensed consolidated financial statements. The unaudited consolidated financial statements as of and for the nine months ended September 30, 2002 and September 30, 2003, reflect all adjustments (consisting of normal, recurring adjustments), which are in the opinion of our management, necessary for a fair presentation of our financial position, results of operations and cash flows as of and for the periods presented. The financial data presented for the periods below include the results of our dairy products division, which we sold on October 15, 2003. The information contained in this table should be read in conjunction with “Selected Historical Financial Data” and the consolidated financial statements and related notes included elsewhere in this prospectus.

The consolidated historical financial data presented below includes financial data of our 2001 predecessor and our predecessor, both of which were also named Michael Foods, Inc. The financial data presented below for the 2001 predecessor relates to our company and its consolidated subsidiaries for the periods prior to the acquisition of the 2001 predecessor in 2001 by an investor group consisting of members of our senior management, two equity sponsors and affiliates of the Michael family. Due to the acquisition in 2001, which we accounted for as a purchase, different bases of accounting have been used to prepare our predecessor’s and the 2001 predecessor’s consolidated financial statements. The acquisition resulted in additional interest expense for new indebtedness that our predecessor incurred and higher depreciation and amortization of fixed assets and other intangible assets recorded. The statements of operations data for the three months ended March 31, 2001, and for the fiscal year ended December 31, 2000, of the 2001 predecessor were prepared from the historical books and records of the 2001 predecessor.

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	2001 Predecessor								Predecessor
	Year Ended December 31, 2000				Three Months Ended March 31, 2001				Nine Months Ended December 31, 2001				Year Ended December 31, 2002				Nine Months Ended September 30,
																	2002				2003
	$		%		$		%		$		%		$		%		$		%		$		%
	(in thousands)
Statement of Operations Data:
Net sales:
Egg products division	637,355		59.0		163,529		59.3		482,324		54.4		657,824		56.3		483,018		56.0		575,570		59.5
Potato products division	60,731		5.6		15,585		5.7		51,268		5.8		72,170		6.2		52,774		6.1		54,943		5.7
Refrigerated distribution division	241,114		22.3		61,185		22.2		201,496		22.8		247,588		21.2		178,617		20.8		193,029		19.9
Dairy products division	141,401		13.1		35,328		12.8		150,554		17.0		190,578		16.3		147,727		17.1		144,667		14.9
Total net sales	1,080,601		100.0		275,627		100.0		885,642		100.0		1,168,160		100.0		862,136		100.0		968,209		100.0
Cost of sales	889,138		82.3		227,707		82.6		734,008		82.9		953,333		81.6		702,639		81.5		800,753		82.7
Gross profit	191,463		17.7		47,920		17.4		151,634		17.1		214,827		18.4		159,497		18.5		167,456		17.3
Selling, general and administrative expenses	104,657		9.7		27,376		9.9		87,484		9.9		116,444		10.0		88,656		10.3		91,545		9.5
Transaction expenses	—		—		11,050		4.0		—		—		—		—		—		—		—		—
Operating profit:
Egg products division	67,658		6.2		12,915		4.7		48,648		5.5		71,717		6.1		52,712		6.1		51,119		5.3
Potato products division	7,650		0.7		1,688		0.6		6,639		0.7		10,832		0.9		7,551		0.9		6,268		0.6
Refrigerated distribution division	16,001		1.5		3,639		1.3		4,947		0.6		13,744		1.2		8,306		1.0		12,557		1.3
Dairy products division	1,322		0.1		3,958		1.4		7,885		0.8		9,918		0.8		7,914		0.9		11,918		1.2
Corporate	(5,825	)	(0.5	)	(12,706	)	(4.6	)	(3,969	)	(0.4	)	(7,828	)	(0.6	)	(5,642	)	(0.7	)	(5,951	)	(0.6	)
Total operating profit	86,806		8.0		9,494		3.4		64,150		7.2		98,383		8.4		70,841		8.2		75,911		7.8
Interest expense, net	13,206		1.2		3,293		1.2		42,335		4.8		50,179		4.3		37,840		4.4		35,840		3.7
Net earnings (loss)	44,710		4.1		(5,653	)	(2.1	)	9,815		1.1		29,661		2.5		20,041		2.3		24,515		2.5

Results for the Nine Months Ended September 30, 2003 Compared to the Nine Months Ended September 30, 2002

Net Sales. Net sales for the nine months ended September 30, 2003 were $968.2 million, an increase of 12%, compared to net sales of $862.1 million in the nine months ended September 30, 2002. The sales growth in the nine months ended September 30, 2003 was principally due to an increase in external net sales of 19% in our egg products division.

Egg Products Division Sales. Egg products division external net sales for the nine months ended September 30, 2003 increased by $92.6 million, or 19%, to $575.6 million from $483.0 million in the nine months ended September 30, 2002. Net sales reflected increased sales from core operations related to improved sales efforts which increased market penetration and the impact of our recently acquired Canadian operations, which increased sales by approximately $37.1 million in the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002. Except for frozen items and shell eggs, unit sales rose in all categories, including an 11% increase in higher value-added items.

Potato Products Division Sales. Potato products division external net sales for the nine months ended September 30, 2003 increased $2.1 million, or 4%, to $54.9 million from $52.8 million in the nine months ended September 30, 2002. Net sales reflected modest increases in both volume and selling prices. Sales were particularly strong for mashed potato products in both the retail and foodservice markets. Unit sales for mashed potato products rose nearly 25% year over year. New account activity, same-account sales growth, expanded distribution and higher marketing spending levels all contributed to the sales increase.

Refrigerated Distribution Division Sales. Refrigerated distribution division external net sales for the nine months ended September 30, 2003 increased by $14.4 million, or 8%, to $193.0 million from $178.6 million in

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the nine months ended September 30, 2002. The increase in net sales reflected higher unit sales for the key product categories of cheese, butter and eggs. Pricing was mixed, rising slightly in total, but declining slightly for the key cheese category, reflective of market conditions.

Dairy Products Division Sales. Dairy products division external net sales for the nine months ended September 30, 2003 decreased $3.0 million, or 2%, to $144.7 million from $147.7 million in the nine months ended September 30, 2002. Net sales reflected lower unit sales due to lower sales of carton products related to a customer diversifying its supplier base, which were not fully offset by unit sales gains from creamers. In addition, pricing rose slightly from its levels in the nine months ended September 30, 2002. We sold our dairy products division to Dean Foods on October 15, 2003.

Gross Profit. Gross profit in the nine months ended September 30, 2003 increased $8.0 million, or 5%, to $167.5 million from $159.5 million in the nine months ended September 30, 2002. Our gross profit margin was 17.3% of net sales in the nine months ended September 30, 2003 compared to 18.5% in the nine months ended September 30, 2002. The decrease in our gross profit margin for the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002 reflected the factors discussed below, particularly increased raw material costs in the egg products, potato products and refrigerated distribution divisions. It is our strategy to increase value-added product sales as a percent of total sales over time, while decreasing commodity-sensitive products’ contribution to consolidated sales. These efforts historically have been beneficial to gross profit margins in most periods.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in the nine months ended September 30, 2003 increased $2.8 million, or 3%, to $91.5 million from $88.7 million in the nine months ended September 30, 2002 and reflected the partial litigation settlements gain of $2.7 million. These expenses were 9.5% of net sales in the nine months ended September 30, 2003, compared to 10.3% of net sales in the nine months ended September 30, 2002, and were reflective of the strong sales growth we achieved, our cost control efforts across all divisions and the approximate $2.7 million litigation gain. Operating expenses, excluding the litigation settlements, rose approximately 6% in the nine months ended September 30, 2003.

Operating Profit. Operating profit in the nine months ended September 30, 2003 increased $5.1 million, or 7%, to $75.9 million from $70.8 million in the nine months ended September 30, 2002, inclusive of the litigation gain. Our operating profit margin was 7.8% of net sales in the nine months ended September 30, 2003 compared to 8.2% in the nine months ended September 30, 2002. The decline in gross profit margin more than offset the improvement seen in the selling, general and administrative expense ratio in the nine months ended September 30, 2003, resulting in the lower operating profit margin.

Egg Products Division Operating Profit. Egg products division operating profit for the nine months ended September 30, 2003 decreased approximately $1.6 million, or 3%, to $51.1 million from $52.7 million for the nine months ended September 30, 2002. Graded shell egg prices increased approximately 23% compared to their levels in the nine months ended September 30, 2002, as reported by Urner Barry Publications, an industry pricing service. These egg market increases raised the cost of purchased eggs which was not fully reflected in our selling prices and resulted in lower margins for most of our egg products. Approximately two-thirds of the egg products division’s annual egg needs are purchased under contracts or in the spot market. A substantial majority of these eggs are priced according to the cost of grain inputs or to egg market prices as reported by Urner Barry. Approximately one-third of our annual egg needs are sourced from internal flocks where feed costs typically represent roughly two-thirds of the cost of producing such eggs. Feed costs were higher in the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002. Costs for our largest feed component, corn, rose by approximately 22% in the nine months ended September 30, 2003, compared to the nine months ended September 30, 2002. As a result of higher open market egg prices and higher feed costs, overall egg costs increased significantly in the nine months ended September 30, 2003, compared to the nine months ended September 30, 2002. Operating profit for the nine months ended September 30, 2003 also included a gain of approximately $2.7 million from the partial settlements of two litigation matters.

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Potato Products Division Operating Profit. Potato products division operating profit for the nine months ended September 30, 2003 decreased approximately $1.3 million, or 17%, to $6.3 million from $7.6 million for the nine months ended September 30, 2002. This decrease is primarily attributable to lower processing yields, which resulted from a lower quality 2002 potato harvest, and increased sales and marketing spending related to raising customer awareness of our mashed potato products.

Refrigerated Distribution Division Operating Profit. Refrigerated distribution division operating profit increased by approximately $4.3 million, or 51%, to $12.6 million from $8.3 million for the nine months ended September 30, 2002. This increase is primarily attributable to an improvement in cheese margins, due to historically low cheese costs through the first half of 2003. Cheese costs in the nine months ended September 30, 2002 were higher than in the nine months ended September 30, 2003, but were in-line with historical levels. Also, we increased our allowance for doubtful accounts in the nine months ended September 30, 2003 by approximately $1.7 million due to the bankruptcy filing by a major customer.

Dairy Products Division Operating Profit. Dairy products division operating profit for the nine months ended September 30, 2003 increased approximately $4.0 million, or 51%, to $11.9 million from $7.9 million for the nine months ended September 30, 2002. This increase reflects improved ingredient costs related to national dairy market conditions. Also, production costs were more favorable than those experienced in the nine months ended September 30, 2002, particularly for the Texas facility. Operating profit for the nine months ended September 30, 2003 excludes approximately $1.8 million of depreciation due to the dairy products division’s “held for sale” status.

Interest Expense and Taxes. Interest expense in the nine months ended September 30, 2003 declined by approximately $2.0 million, or 5%, to $35.8 million compared to $37.8 million in the nine months ended September 30, 2003, reflecting lower debt levels and lower short-term interest rates. Our tax rate was 38.8% in the nine months ended September 30, 2003 compared to 39.3% in the nine months ended September 30, 2002.

Results for the Year Ended December 31, 2002 Compared to the Combined Results for the Year Ended December 31, 2001

Net Sales. Net sales for the year ended December 31, 2002 increased $6.9 million, or approximately 1%, to $1,168.2 million from $1,161.3 million for the year ended December 31, 2001. The strongest divisional sales growth occurred in the potato products division, which recorded an 8% external net sales increase. External net sales growth of 2% and 3% was recorded by the egg products and dairy products divisions, respectively, with the egg products division benefiting from the acquisition of our Canadian egg products business in August 2002. Refrigerated distribution external net sales declined by 6% due to lower commodity prices for butter, lower unit sales and customer store closings.

Egg Products Division Sales. Egg products division external net sales for the year ended December 31, 2002 increased $11.9 million, or 2%, to $657.8 million from $645.9 million for the year ended December 31, 2001. Sales rose for higher value-added products, in total, including precooked items, egg substitutes and hardcooked eggs, and declined for the more commodity price sensitive products, such as frozen and dried egg products. Reflecting our strategy to sell more higher value-added egg products, shell egg sales declined by 7% in 2002, while shell egg dozens sold decreased by over 12%. During 2002, shell egg prices increased by approximately 3%, as reported by Urner Barry resulting in somewhat better margins for frozen and dried egg products. However, in some cases, we declined to renew contracts for frozen products last year because of a lack of margin contribution. The Canadian egg products business acquired in August 2002, and the related consolidation of Trilogy Egg Products, Inc., one of our joint ventures, added approximately 3% to the 2002 egg products division’s net sales. Sales of higher value-added egg products represented approximately 64% of the egg products division’s sales in both 2002 and 2001.

Potato Products Division Sales. Potato products division external net sales for the year ended December 31, 2002 increased $5.3 million, or 8%, to $72.2 million from $66.9 million for the year ended December 31, 2001.

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This increase was mainly due to strong unit sales growth for retail refrigerated potato products, which increased approximately 16% from 2001. Foodservice unit sales increased by approximately 4%. Sales to new customers, growth in sales to existing customers, increased marketing and new product introductions all contributed to the sales increase, with mashed potato products showing the greatest growth in both retail and foodservice markets.

Refrigerated Distribution Division Sales. Refrigerated distribution division external net sales for the year ended December 31, 2002 decreased $15.1 million, or 6%, to $247.6 million from $262.7 million for the year ended December 31, 2001. This decrease was due, in part, to lower unit sales for cheese, margarine and bakery items. Customer store closings and a sluggish domestic food sales environment contributed to this sales decline. While net sales declined 6%, quantities of distributed products fell by less than 1%. Further, shell egg dozens sold declined by 6%, which was in line with our strategy to increase our focus on higher value-added egg products. Deflation also contributed significantly to the divisional sales decline, with lower market prices prevailing for butter and margarine.

Dairy Products Division Sales. Dairy products division external net sales for the year ended December 31, 2002 increased $4.7 million, or 3%, to $190.6 million from $185.9 million for the year ended December 31, 2001. This increase mainly was due to strong unit sales volumes for certain specialty cartoned items contract packed for other dairies and notable growth in non-refrigerated creamer sales. National dairy ingredient prices decreased during the year, resulting in a lower pricing environment of approximately 4%, on average, for the products sold by the dairy products division resulting in lower external net sales growth in 2002. We sold our dairy products division on October 15, 2003.

Gross Profit. Gross profit for the year ended December 31, 2002 increased $15.2 million, or approximately 7%, to $214.8 million from $199.6 million for the year ended December 31, 2001. Our gross profit margin was 18.4% of net sales in 2002, whereas the combined gross profit margin was 17.2% in 2001. The increase in gross profit margin was due to increased gross profits from many products, including egg substitutes, precooked egg products, cheese and specialty dairy products. In general, raw material costs were more favorable in 2002 than in 2001, and cost savings were realized from production efficiencies in several product categories.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2002 increased $1.5 million, or 1%, to $116.4 million from $114.9 million for the year ended December 31, 2001. Selling, general and administrative expenses were nearly consistent at 10% of net sales in 2002 versus 9.9% for 2001. Whereas 2002 expenses no longer included goodwill amortization, there were increases in depreciation and incentives accruals in 2002. The former reflected a full year of increased asset values, due to the purchase accounting at the time of the 2001 acquisition, being depreciated as compared to a partial year in 2001. Separate from selling, general and administrative expenses in 2001, the predecessor recorded non-recurring expenses related to the 2001 acquisition for financial, legal, advisory and regulatory filing fees. These expenses of approximately $11.1 million are reflected in our consolidated statements of operations included elsewhere in this prospectus as transaction expenses.

Operating Profit. Operating profit for the year ended December 31, 2002 increased $24.8 million, or approximately 34%, to $98.4 million from $73.6 million for the year ended December 31, 2001. This increase was due mainly to the increase in gross profit, as described above. Also, 2001 results included one-time transaction expenses for the predecessor relating to the 2001 acquisition.

Egg Products Division Operating Profit. Egg products division operating profit for the year ended December 31, 2002 increased $10.1 million, or 16%, to $71.7 million from $61.6 million for the year ended December 31, 2001. Operating profit for higher value-added egg products increased by $9.3 million, or 15%, from 2001, while operating profits from other egg products were near break-even levels, collectively, as compared to modest profitability in 2001. The increase in divisional operating margin was due mainly to increased gross profits from value-added items, resulting from favorable raw material costs and production efficiencies. The 2001 operating profit for the division was affected by an approximate $1.6 million loss from the egg product division’s termination of The Lipid Company S.A., a European egg products joint venture.

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Potato Products Division Operating Profit. Potato products division operating profit for the year ended December 31, 2002 increased $2.5 million, or 30%, to $10.8 million from $8.3 million for the year ended December 31, 2001. This increase reflected gross profit improvement tied to volume growth, particularly from the more profitable retail segment, and continuing improvements in plant operations.

Refrigerated Distribution Division Operating Profit. Refrigerated distribution division operating profit for the year ended December 31, 2002 increased $5.1 million, or 59%, to $13.7 million from $8.6 million for the year ended December 31, 2001. Profit margin for our key product line, cheese, rose in 2002 due to more normalized product costs prevailing through much of the year. However, operating profit results for the first several months of 2002 were depressed due to cheese hedging, which resulted in cheese costs being in excess of market levels. When cheese inventory costs returned to more normal levels, due to a reduction in hedging, operating profits for the division increased significantly in the latter part of the year.

Dairy Products Division Operating Profit. Dairy products division operating profit for the year ended December 31, 2002 decreased $1.9 million, or 16%, to $9.9 million from $11.8 million for the year ended December 31, 2001. Operating profit for the dairy products division in 2001 included a $3.2 million final insurance settlement payment related to our 1999 milk recall. Exclusive of this settlement amount, the operating profit for the dairy products division increased $1.3 million in 2002. This reflected more favorable ingredient costs, which more than offset higher than expected production costs at one of our dairy plants.

Combined Results for the Year Ended December 31, 2001 Compared to the 2001 Predecessor’s Results for the Year Ended December 31, 2000

Net Sales. Net sales for the year ended December 31, 2001 increased $80.7 million, or 7%, to $1,161.3 million from $1,080.6 million for the year ended December 31, 2000. Over one-half of this increase was the result of a 31% increase in net sales from the dairy products division, with both volume growth and higher dairy market pricing contributing to this growth. External net sales growth of 10% and 9% was recorded by the potato products and the refrigerated distribution divisions. Refrigerated distribution sales growth was roughly half from unit sales growth and half from price inflation, particularly in the important cheese category. Potato products sales growth was primarily from increased unit sales, with particularly strong growth in the retail category. Sales in the egg products division grew minimally due to fairly stable volume and pricing.

Egg Products Division Sales. Egg products division external net sales for the year ended December 31, 2001 increased $8.5 million, or 1%, to $645.9 million from $637.4 million for the year ended December 31, 2000. Sales growth for certain higher value-added products, such as precooked patties and omelets, egg substitutes and hardcooked eggs, offset lower sales from commodity price sensitive products such as dried egg products. During 2001, shell egg prices declined by approximately 3%, as reported by Urner Barry, resulting in narrow margins for frozen, short-shelf life liquid and dried egg products. As a result, we limited sales volumes for frozen products, in particular, because of the adverse pricing and margin environment.

Potato Products Division Sales. Potato products division external net sales for the year ended December 31, 2001 increased $6.2 million, or 10%, to $66.9 million from $60.7 million for the year ended December 31, 2000. This increase was mainly due to a strong unit sales growth for retail refrigerated potato products, which increased approximately 25% from 2000. Also, foodservice unit sales increased by approximately 7%. Sales to new customers, growth in sales to existing customers, marketing spending and new product introductions all contributed to the sales increase.

In early 1999, we evaluated a soured milk complaint from a customer and discovered a pathogen presence in nine cartons of milk. As a result, we initiated a recall of approximately five million cartons of milk and related products. Our operating results for the dairy products division for 1999 and 2000 were adversely impacted as a result of volume declines and operating inefficiencies associated with the recall. We settled the only major claim with respect to the product recall for $1.7 million, the majority of which was covered by our insurance policies.

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Refrigerated Distribution Division Sales. Refrigerated distribution division external net sales for the year ended December 31, 2001 increased $21.6 million, or 9%, to $262.7 million from $241.1 million for the year ended December 31, 2000. This increase was mainly due to unit sales growth in cheese, margarine and bagels. Cheese sales growth was somewhat constrained, and butter sales declined, as a result of high retail prices during much of the year due to a high national butterfat market. Volume growth in the refrigerated distribution division in 2001 resulted from sales to new customers, particularly in new territories, promotional activity and increased consumer advertising and higher dairy prices.

Dairy Products Division Sales. Dairy products division external net sales for the year ended December 31, 2001 increased by $44.5 million, or 31%, to $185.9 million from $141.4 million for the year ended December 31, 2000. This increase was mainly due to strong unit sales volumes for certain specialty cartoned items contract packed for other dairies and growth in non-refrigerated creamer sales. National dairy ingredient price increases during the year resulted in a higher pricing environment for the products sold by the dairy products division contributing to the higher dairy products division external net sales in 2001. Sales in 2000 were adversely impacted as a result of volume declines and operating inefficiencies associated with the aftermath of our 1999 recall of cartoned milk.

Gross Profit. Gross profit for the year ended December 31, 2001 increased $8.1 million, or approximately 4%, to $199.6 million from $191.5 million for the predecessor in the year ended December 31, 2000. The combined gross profit margin was 17.2% of net sales for 2001, as compared to 17.7% of net sales for the predecessor in 2000. The decrease in gross profit margin was mainly due to decreased gross profit from frozen egg products, resulting from market price pressures, and reduced gross margins from cheese and butter sales due to the significant rise in product costs in 2001, which outpaced our ability to adjust our selling prices for much of the year.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2001 increased $10.2 million, or 10%, to $114.9 million from $104.7 million for the predecessor for the year ended December 31, 2000. Selling, general and administrative expenses increased as a percent of sales in 2001, as compared to the predecessor results in 2000. Higher expenses were incurred in 2001 to support retail and foodservice marketing efforts and broadened sales efforts, and to establish a centralized purchasing department. Additionally, operating expenses reflected the impact of incremental amortization related to the 2001 acquisition, of approximately $3.0 million, which resulted in the slightly higher expense as a percentage of sales. Separate from selling, general and administrative expenses in 2001, the predecessor recorded non-recurring expenses related to the 2001 acquisition for financial, legal, advisory and regulatory filing fees. These expenses of approximately $11.1 million are reflected in the predecessor’s consolidated statements of operations, included elsewhere in this prospectus, as transaction expenses.

Operating Profit. Operating profit for the year ended December 31, 2001 decreased $13.2 million, or approximately 15%, to $73.6 million from $86.8 million for the predecessor for the year ended December 31, 2000. This decrease was mainly due to the 2001 acquisition expenses incurred by the predecessor in the first three months of 2001, as discussed above.

Egg Products Division Operating Profit. Egg products division operating profit for the year ended December 31, 2001 decreased $6.1 million, or 9%, to $61.6 million from $67.7 million for the year ended December 31, 2000. Operating profit for higher value-added egg products decreased by $5.5 million, or 8%, from 2000, while operating profits from other egg products remained relatively flat. The decrease in operating margins was mainly due to an approximately $4.0 million increase in amortization of goodwill and increased depreciation of approximately $6.2 million as a result of asset appraisals related to the 2001 acquisition. The 2001 operating profit for the egg products division was also affected by an approximately $1.6 million loss from the termination of The Lipid Company S.A., a European egg products joint venture. A break-even return was recorded from the same joint venture in 2000.

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Potato Products Division Operating Profit. Potato products division operating profit for the year ended December 31, 2001 increased $0.7 million, or 9%, to $8.3 million from $7.6 million for the year ended December 31, 2000. This increase reflected benefits from volume growth, particularly from the more profitable retail segment, and continuing improvements in plant operations.

Refrigerated Distribution Division Operating Profit. Refrigerated distribution division operating profit for the year ended December 31, 2001 decreased $7.4 million, or 46%, to $8.6 million from $16.0 million for the year ended December 31, 2000. Profit margins for key lines, such as cheese and butter, were depressed due to a rapid and sustained increase in dairy market-based ingredient costs through much of the year, without a comparable increase in retail selling prices. These market conditions were in sharp contrast to those which prevailed in 2000.

Dairy Products Division Operating Profit. Dairy products division operating profit for the year ended December 31, 2001 increased significantly, up $10.5 million to $11.8 million from $1.3 million for the year ended December 31, 2000. Operating profit for the dairy products division increased substantially as a result of strong unit sales growth, particularly from specialty items such as non-refrigerated creamers and improved plant operating costs. Operating profits were also favorably impacted by a $3.2 million final insurance settlement payment related to a 1999 cartoned milk recall and reduced amortization expense of $1.2 million resulting from the appraisal of a non-compete agreement due to the 2001 acquisition. Operating profit for the dairy products division was depressed in 2000 due to the loss of a major industrial ingredient customer, increased bad debt expense resulting from a foodservice distributor’s bankruptcy filing, higher overhead expenses and above-average operating expenses as a result of the recall.

Seasonality and Inflation

Our quarterly operating results are affected by the seasonal fluctuations of our net sales and operating profits. Specifically, shell egg prices typically rise seasonally in the first and fourth quarters of the year due to increased demand during holiday periods. Consequently, net sales in the egg products division increase in the fourth quarter. Operating profits from the potato products division are less seasonal, but tend to be higher in the second half of the year coinciding with the potato harvest. Generally, the refrigerated distribution division has higher net sales and operating profits in the fourth quarter, coinciding with incremental consumer demand during the holiday season. In recent years, other than fluctuations in raw material costs, largely related to short-term supply and demand variances, inflation has not been a significant factor in our operations. Inflation is not expected to have a significant impact on the business, results of operations or financial condition since we can generally offset the impact of inflation through a combination of productivity gains and price increases. See “Risk Factors—Risks Relating to Our Company, Our Industry and the Industries We Serve—Our industry and the sales of our products are subject to seasonal variations and, as a result, our quarterly operating results may fluctuate.”

Liquidity and Capital Resources

Historically, we have financed our liquidity requirements through internally generated funds, senior bank borrowings and the issuance of other indebtedness. We believe such sources remain viable financing alternatives to meet our anticipated needs. Our investments in acquisitions, joint ventures and capital expenditures have been a significant use of capital. We plan to continue to invest in advanced production facilities to enhance our competitive position.

Cash flow provided by operating activities was $98.4 million for the nine months ended September 30, 2003, compared to $78.6 million for the nine months ended September 30, 2002. The increase in our cash flow provided by operating activities for the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002 is primarily attributable to increases in cash flow from operations, accounts payable and accrued expenses. Cash flow provided by operating activities was $83.0 million for the year ended

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December 31, 2002, compared to $114.8 million, combining our and the predecessor results, for the year ended December 31, 2001, and $69.1 million for the predecessor’s year ended December 31, 2000. The decrease in cash flow provided by operating activities from 2001 to 2002 was primarily attributable to an increase in operating working capital related to our Canadian acquisition. The increase in our and the predecessor’s cash flow provided by operating activities from 2000 to 2001 was primarily attributable to significantly reduced operating working capital.

In April 2001, we entered into a credit agreement with various lenders, including commercial banks, other financial institutions and investment groups, which was scheduled to expire in 2007 and 2008 and provided credit facilities which originally provided for $470.0 million in loans. Within these credit facilities, there was a $100.0 million revolving line of credit. At September 30, 2003, there was approximately $6.5 million utilized under the revolving line of credit for letters of credit, while the outstanding balance of the term A portion of that credit facility approximated $51.8 million and the term B portion approximated $180.6 million. We reduced our debt under that credit agreement by approximately $68.0 million in the nine months ended September 30, 2003 through a combination of scheduled payments and voluntary prepayments. In addition, in October 2003, we used the net after tax proceeds from the sale of the dairy products division of approximately $127.0 million to repay debt under that credit facility. We used the proceeds of the transactions to repay all borrowings under, and terminate, that credit facility. The weighted average interest rate for our borrowings under the credit facility, adjusted for the effects of hedging activities, was approximately 7.4% at September 30, 2003.

As a result of the 2001 acquisition, we incurred approximately $580 million of long-term debt, including $380 million of borrowings under a senior credit agreement and $200 million of indebtedness through the issuance of 11 ³/4% senior subordinated notes due 2011. Our total annual interest expense related to the term loans under the credit agreement and the notes was approximately $51 million in 2002.

As a result of our acquisition in 2003, we incurred approximately $780.0 million of long-term debt, including $495.0 million of borrowings under our senior credit facility and $135.0 million of borrowings under the senior unsecured term loan facility and $150.0 million from the original issuance of the old notes.

The senior credit facility that we entered into in connection with the transactions, currently provides a $100.0 million revolving credit facility that will mature in six years from the original issuance and a $495.0 million term loan facility that will mature in seven years from the original issuance. In connection with the transactions, we also entered into a senior unsecured term loan facility of $135.0 million that will mature in eight years from the original issuance. For more information, see “Description of Credit Facilities.”

We used borrowings under the term loan facility of our senior credit facility, borrowings under the senior unsecured term loan facility and the net proceeds of the offering of the old notes to consummate the transactions (including repayment in full of our then existing credit facility), pay fees and expenses incurred in connection with the transactions and to provide for working capital and other general corporate purposes, including other permitted acquisitions after the consummation of the transactions described in this prospectus. Given our business trends and cash flow, we did not significantly use the revolving line of credit during the fourth quarter of 2003.

As a result of the transactions, including the offering of the old notes, we have substantially increased our cash interest expense.

Our senior credit facility requires us to meet a minimum interest coverage ratio and a maximum leverage ratio. In addition, the senior credit facility, the senior unsecured term loan facility and the indenture relating to the notes contains certain restrictive covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances and other matters customarily restricted in these agreements. Our failure to comply with these covenants could result in an event of default, which if not cured or waived could have a material adverse effect on our results of operations, financial position and cash flow.

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The following is a calculation of our minimum interest coverage and maximum leverage ratios under our senior credit facility. The terms and related calculations are defined in the senior credit facility agreement which has been included as Exhibit 10.1 of the registration statement of which this prospectus forms a part.

	Year Ended December 31,						Trailing Twelve Months Ended September 30,
	2001			2002			2002			2003
	(dollars in thousands)
Calculation of Interest Coverage Ratio:
Consolidated EBITDA (1)	$	145,757		$	155,487		$	153,431		$	160,976
Consolidated cash interest expense		51,213			46,720			47,541			43,734
Actual Interest Coverage Ratio (2)		2.85	x		3.33	x		3.23	x		3.68	x
Minimum Permitted Interest Coverage Ratio		2.00	x		2.00	x		2.00	x		2.00	x
Calculation of Leverage Ratio:
Funded Indebtedness	$	563,297		$	526,940		$	552,100		$	456,074
Less: Cash and cash equivalents		(27,660	)		(20,572	)		(57,127	)		(25,316	)
		535,637			506,368			494,973			430,758
Consolidated EBITDA (1)		145,757			155,487			153,431			160,976
Actual Leverage Ratio (3)		3.67	x		3.26	x		3.23	x		2.68	x
Maximum Permitted Leverage Ratio		4.75	x		4.50	x		4.75	x		4.50	x

(1) Consolidated EBITDA is defined in our senior credit facility as follows:

	Year Ended December 31,					Trailing Twelve Months Ended September 30,
	2001			2002		2002		2003
	(dollars in thousands)
Net earnings	$	4,162		$	29,661	$	24,891	$	34,135
Interest expense, excluding amortization of debt issuance costs		43,269			45,961		46,831		43,304
Amortization of debt issuance costs		2,359			4,218		3,687		4,876
Income tax expense		8,341			18,543		18,900		21,139
Depreciation and amortization		59,480			54,258		56,223		54,654
Equity sponsor management fee (a)		725			1,300		1,182		1,431
Industrial revenue bonds related expenses (b)		905			961		944		957
Other expense, early extinguishment of debt (c)		15,513			—		—		—
Transaction expenses (d)		11,050			—		—		—
Other (e)		(47	)		585		773		480
Consolidated EBITDA, as defined in our senior credit facility	$	145,757		$	155,487	$	153,431	$	160,976

(a) Reflects management fees paid to our equity sponsor.

(b) Reflects fees associated with industrial revenue bonds guaranteed by certain of our subsidiaries.

(c) Reflects loss associated with the early retirement of debt in connection with our acquisition in 2001.

(d) Reflects expenses incurred in connection with our acquisition in 2001.

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(e) Reflects (i) equity (earnings) losses of our unconsolidated subsidiaries totaling $1,576, ($132), $256 and ($4) for the years ended December 31, 2001 and 2002 and for the trailing twelve months ended September 30, 2002 and 2003, respectively; (ii) gains from the sale of assets not in the ordinary course of business totaling ($59), ($58) and ($1) for the year ended December 31, 2002 and the trailing twelve months ended September 30, 2002 and 2003, respectively; (iii) interest income of $410, $776, $575 and $485 for the years ended December 31, 2001 and 2002 and for the trailing twelve months ended September 30, 2002 and 2003, respectively; (iv) reduced margin on sales of certain finished goods inventory as a result of the application of purchase price allocations to our inventory totaling approximately $1,142 for the year ended December 31, 2001, and (v) insurance reimbursement for the year ended December 31, 2001 totaling ($3,175).

(2) Represents ratio of consolidated EBITDA to consolidated interest expense.

(3) Represents ratio of funded indebtedness less cash and cash equivalents to consolidated EBITDA.

Our ability to make payments on and to refinance our debt, including the notes, and to fund planned capital expenditures will depend on our ability to generate sufficient cash in the future. This, to some extent, is subject to general economic, financial, competitive and other factors that are beyond our control. We believe that, based on current levels of operations, we will be able to meet our debt service obligations when due. Significant assumptions underlie this belief, including, among other things, that we will continue to be successful in implementing our business strategy and that there will be no material adverse developments in our business, liquidity or capital requirements. If our future cash flows from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity capital or restructure or refinance all or a portion of our debt, including the notes, on or before maturity. We can provide no assurances that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of our existing and future indebtedness, including the notes, our senior credit facility and our senior unsecured term loan facility may limit our ability to pursue any of these alternatives.

Our longer-term planning is focused on growing our sales, earnings and cash flows primarily by focusing on our existing business lines, through expanding product offerings, increasing production capacity for value-added products and broadening customer bases. We believe our financial resources are sufficient to meet the working capital and capital spending necessary to execute our longer-term plans. In executing these plans, we expect to reduce debt over the coming years. However, possible significant acquisition activity could result in us seeking additional financing resources, which we would expect would be available to us if they are sought.

Capital Spending

We invested approximately $27.4 million in capital expenditures during the year ended December 31, 2002, and we made capital investments of approximately $34.1 million in 2001 and approximately $37.4 million in 2000. Of these amounts, approximately $6.4 million, $11.7 million and $9.6 million were made in our recently sold dairy products division in 2002, 2001 and 2000, respectively. Also, during 2002, we purchased substantially all of the egg product-related assets of Canadian Inovatech Inc. for approximately $18.0 million. We invested approximately $22.8 million in capital expenditures during the nine months ended September 30, 2003. Of this amount, approximately $6.2 million in capital expenditures were made in the dairy products division. Capital expenditures in 2000, 2001, 2002 and the nine months ended September 30, 2003 were funded from cash flow from operations and borrowings under our then existing credit facility. We spent approximately $7.0 million in total capital expenditures during the fourth quarter of 2003, which was used to maintain existing production facilities and to expand production capacity for value-added products. This spending was funded from operating cash flow. We expect to spend approximately $38.0 million in total capital expenditures in 2004.

Debt Guarantees

Certain of our subsidiaries have guaranteed the repayment of certain industrial revenue bonds used for the expansion of the wastewater treatment facilities of several municipalities where we have food processing facilities. The repayment of these bonds is funded through the wastewater treatment charges paid by us.

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However, should those charges not be sufficient to pay the bond payments as they become due, we have agreed to pay any shortfall. The remaining principal balance of these bonds at September 30, 2003 was approximately $6.4 million.

Insurance

In general, our insurance costs have increased over the past three years. The insurance industry trends of significant increases in premiums were accelerated by the events of September 11th. In 2003, however, our property and casualty insurance premiums did not significantly increase. In recent years, we have also experienced, and expect to continue to experience, rising premiums for our portion of health and dental insurance benefits offered to our employees.

Commodity Risk Management

The primary raw materials used in the production of eggs are corn and soybean meal. We purchase these materials to feed our approximately 13.4 million hens, which produce approximately a third of our annual egg requirements. Shell and liquid eggs are purchased from third-party suppliers and in the spot market for the remainder of the egg products division’s needs. Eggs, corn and soybean meal are commodities that are subject to significant price fluctuations due to market conditions which, in certain circumstances, can adversely affect our results of operations.

In order to reduce the impact of changes in commodity prices on our operating results, we have developed a risk management strategy that includes the following elements:

• We hedge a significant percentage of our grain commodity requirements for both internal egg production and third-party egg procurement contracts that are priced based on grain prices. This activity protects against unexpected increases in grain prices and provides predictability with respect to a portion of future raw materials costs. Hedging can diminish the opportunity to benefit from the improved margins that would result from an unanticipated decline in grain prices. The degree to which we are hedged varies based on our expectation of future commodity prices.

• We seek to align our procurement and sales volumes by matching the percentage of variable pricing contracts with our customers and the percentage of raw materials procured on a variable basis. This matching of our variable priced procurement contracts with that of variable priced sales contracts provides us with a natural hedge during times of grain and egg market volatility. As part of this effort, we are attempting to transition customers to variable pricing contracts that are priced off the same index used to purchase shell and liquid eggs. These efforts have generally been successful over the past two years.

• We have negotiated agreements with certain of our fixed price customers which allow us to raise prices by giving 30 to 60 days notice in response to increased commodity prices. The majority of these contracts are with major broad-line foodservice customers who are generally less sensitive to price increases because their customers purchase food products from them on a cost-plus basis.

• We are continuing to transition customers from lower value-added egg products to higher margin, higher value-added specialty products. These products are less sensitive to fluctuations in underlying commodity prices because the raw material component is a smaller percentage of total cost and we generally have the ability to pass through certain cost increases related to our higher value-added egg products to customers. This transition to higher value-added specialty products has taken place gradually over the last five to six years. These products represented approximately 64% of our egg products sales in 2002, up from approximately 49% in 1997.

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The following table illustrates a sensitivity analysis that estimates our exposure to market risk associated with corn and soybean meal futures contracts. The notional value of commodity positions represents the notional value of the corn and soybean meal futures contracts for the nine months ended September 30, 2003. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in commodity prices.

	Notional Value		Market Risk
	(in thousands)
Corn futures contracts:
Highest position	$	28,955	$	2,896
Lowest position		11,556		1,156
Average position		19,297		1,930
Soybean meal futures contracts:
Highest position	$	12,889	$	1,289
Lowest position		5,271		527
Average position		9,157		916

During 2001, we began using futures contracts to cover a portion of our estimated cheese procurement needs. During 2002, we used these contracts to hedge a portion of our needs for a portion of the year. As of September 30, 2003, there were no such contracts.

Additionally, we hedge some of our natural gas requirements for producing our products by fixing the price for a portion of our natural gas usage. At September 30, 2003, the net fair value of these fixed price purchases was approximately $1.2 million. These monthly purchases have been made through March 2004 and cover approximately 36% of our estimated usage requirements during that period. The potential loss in fair value of these contacts resulting from a 10% adverse change in the underlying commodity prices would be approximately $0.1 million.

We also partially mitigate the risk of variability of our transportation-related fuel costs through the use of home heating oil futures contracts. At September 30, 2003, the net fair value of these contracts was approximately $2.3 million. These contracts expire monthly from May 2004 through December 2004 and cover approximately 47% of our estimated usage and exposure during that period. The potential loss in fair value of these contracts resulting from a 10% adverse change in the underlying commodity prices would be approximately $0.2 million.

See also “Business—Egg Products Division—Commodity Risk Management” and “Risk Factors—Risks Relating to Our Company, Our Industry and the Industries We Serve—Our operating results are significantly affected by egg, potato and cheese market prices and the prices of other raw materials, such as grain, which can fluctuate widely.”

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate estimates, including those related to the allowance for doubtful accounts, valuation of goodwill and intangible assets, accrued promotion costs, accruals for insurance, financial instruments and income tax provision. We base these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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We believe the following critical accounting policies reflect the significant judgments and estimates used in the preparation of our consolidated financial statements:

Allowance for Doubtful Accounts. We estimate the uncollectibility of our accounts receivable. In determining the adequacy of the allowance, we analyze the value of our customer’s financial statements, historical collection experience, aging of receivables and other economic and industry factors. It is possible that the accuracy of the estimation process could be materially impacted by different judgments as to collectibility based on the information considered and further deterioration of accounts.

Valuation of Goodwill and Intangibles. We assess the impairment of identifiable intangibles, long-lived assets and related goodwill whenever events or changes in circumstances indicate the carrying value may not be recoverable. Factors which could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the use of acquired assets or our strategy and significant negative industry or economic trends. For intangible assets and long-lived assets, an assessment may occur if the carrying value of the asset exceeds the undiscounted cash flows from the asset. When we determine that the carrying value of intangibles, long-lived assets and related goodwill may not be recoverable based upon the existence of an impairment, we measure any potential impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in our current business model. On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” and were required to assess our goodwill for impairment issues upon adoption, and are required to do so at least annually now.

Accrued Promotion Costs. The amount and timing of expense recognition for customer promotion activities involve management judgment related to estimated participation, performance levels and historical promotion data and trends. The vast majority of year-end liabilities associated with these activities are resolved within the following fiscal year and, therefore, do not require highly uncertain long-term estimates.

Accruals for Insurance. We are primarily self-insured for our medical and dental liability costs. We maintain “high deductible” insurance policies for our workers compensation and general and automobile liability costs. It is our policy to record our self-insurance liabilities based on claims filed and an estimate of claims incurred but not yet reported. Any projection of losses concerning medical, dental, workers compensation and general and automobile liability is subject to a considerable degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns.

Financial Instruments. We use derivative financial instruments to manage our exposure to various market risks, including certain interest rates, grain and natural gas costs.

Income Tax Provision. Income tax expense involves management judgment as to the ultimate resolution of any tax issues. Historically, our assessments of the ultimate resolution of tax issues have been reasonably accurate. The current open issues are not dissimilar from historical items.

Recent Accounting Pronouncements

On January 1, 2002, we adopted EITF Issue No. 01-09, Accounting for Consideration given by a Vendor to a Customer (including a Reseller of the Vendor’s Products), effective January 1, 2002. The adoption of EITF Issue No. 01-09 did not have a material effect on our consolidated financial statements.

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations” which provides accounting requirements for retirement obligations associated with tangible long-lived assets. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002 and was adopted by us effective January 1, 2003. The adoption of SFAS No. 143 did not have a material effect on our consolidate financial statements.

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In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statement 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” Under SFAS No. 4, all gains and losses from extinguishment of debt were required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. SFAS No. 145 requires that gains and losses from extinguishment of debt be classified as an extraordinary item only if they are part of the entities recurring operations and not unusual or infrequent. The effect of adopting this standard on our financial statements was to reclassify our extraordinary loss in the three-months ended March 31, 2001 to other expense in the statement of operations.

In June 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. Prior to the adoption of this Standard, a liability for an exit cost, as defined by Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring),” was recognized at the date of an entity’s commitment to an exit plan. SFAS No. 146 was effective for the Company for exit plans or disposal activities initiated after December 31, 2002. Effective January 1, 2003, we adopted the provisions of SFAS 146, which had no impact on our financial statements.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates on the disclosure requirements in the financial statements concerning obligations under certain guarantees. The interpretation also clarifies the requirements related to the recognition of liabilities by a guarantor at the inception of certain guarantees. The disclosure requirements of this interpretation were effective for us on December 31, 2002, but did not require any additional disclosure. The recognition provisions of the interpretation are applicable only to guarantees issued or modified after December 31, 2002. The adoption of this standard did not impact our financial statements.

FIN 46, “Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51,” as amended, clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to entities in which investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The transitional disclosure provisions of FIN 46 were effective for all financial statements issued after January 31, 2003. FIN 46 applied immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. For variable interest entities created before February 1, 2003, FIN 46 is effective for the first period ending after December 15, 2003. At September 30, 2003, the Company did not have ownership in any variable interest in variable interest entities. We will apply the consolidation requirements of FIN 46 in future periods should an interest in a variable interest entity be acquired.

In May 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 was effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on our financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” The statement requires that an issuer classify financial instruments that are within its scope as a liability. Many of those instruments were classified as equity under previous guidance. SFAS No. 150 was effective for all financial instruments entered into or modified after May 31, 2003. Otherwise, it was effective on July 1, 2003. The adoption of SFAS No. 150 did not have a material effect on our financial position or results of operations.

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Interest Rates

We are exposed to changes in interest rates. Our senior credit facility and senior unsecured term loan facility are variable rate debt. Interest rate changes therefore generally do not affect the market value of that debt but do impact the amount of our interest payments and, therefore, our future earnings and cash flows, assuming other factors are held constant. Conversely, for fixed rate debt, interest rate changes do not impact future cash flows and earnings, but do impact the fair market value of that debt, assuming other factors are held constant. Assuming we had completed the transactions including the offering of the old notes, and applied the proceeds as intended as of September 30, 2003, we would have had variable rate debt of approximately $630.0 million. Holding other variables constant, including levels of indebtedness, a one percentage point increase in interest rates would have had an estimated impact on pre-tax earnings and cash flows for the next twelve month period of $6.3 million. As required under our senior credit facility, we recently entered into an interest rate “cap” agreement, which provides us protection against sharp increases in short-term interest rates, for a portion of our variable rate debt, from November 2004 through November 2006.

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BUSINESS

Overview

We are a leading producer and distributor of specialty egg and refrigerated potato products to the foodservice, retail and industrial ingredient markets. We also distribute refrigerated food items, primarily cheese and other dairy products, to the retail grocery market predominantly in the central United States. For the twelve months ended September 30, 2003, we generated net sales of $1,086.7 million on a pro forma basis after giving effect to the sale of the dairy products division, which the predecessor sold in October 2003.

Our largest operating division, our egg products division, is the largest producer of processed egg products in the United States with an estimated 44% share of the processed egg market, and we believe it is three times larger than its closest competitor. We estimate that we currently have a 58% share of the higher value-added segment of the U.S. processed egg market, which includes extended shelf-life, or ESL, liquid eggs, precooked egg patties and omelets, low/no cholesterol liquid eggs and hardcooked eggs. During the twelve months ended September 30, 2003, we processed approximately 1.3 billion pounds of eggs through our fully-integrated national operations, and we believe we are the lowest cost producer of processed egg products in the United States.

As the market leader for processed egg products, we have benefited from the consistent growth in the demand for eggs over the last decade. Since 2000, we have grown our sales volumes of higher value-added egg products at more than twice the industry growth rate for egg consumption. Moreover, we have benefited from our ability to capitalize on favorable consumer and food industry trends by introducing new, higher value-added egg products. This ability has helped us to improve our egg products division’s operating profit margin from 3.3% in 1992 to 9.3% for the twelve months ended September 30, 2003.

We offer our customers a wide range of products within our food categories. Our strategy within these categories is to focus on higher-margin specialty segments (such as ESL liquid eggs, precooked egg products and refrigerated potato products) which we believe are growing at a higher rate than their respective food categories. We also seek to develop and market products that address key food industry concerns, including food safety, convenience, product quality and consistency and labor and waste reduction. Our products are primarily sold through long-standing preferred supplier relationships with major foodservice distributors and national restaurant chains. The following charts set forth the net sales and operating profit of our three divisions—egg products, potato products and refrigerated distribution—as a percentage of total net sales and operating profit for these three divisions for the twelve months ended September 30, 2003.

Egg Products. Our egg products division is the largest producer of processed egg products and the third largest egg producer in the United States. Our higher-margin specialty products include ESL liquid eggs, precooked egg patties and omelets, low/no cholesterol liquid egg products and hardcooked eggs. Within the higher value-added segment of the processed egg market, we currently have an estimated 58% market share in the United States. We are also the leader in producing frozen, dried and short shelf-life liquid egg products. Our

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retail grocery brands include Better ’n Eggs and All Whites and our foodservice brands include Table Ready and Easy Eggs. The egg products division’s major customers include leading foodservice distributors, such as Sysco Corporation and U.S. Foodservice, national restaurant chains, such as Burger King Corporation, IHOP Corp. (International House of Pancakes), Sonic Corp. and Dunkin’ Donuts Incorporated, major retail grocery store chains, such as Costco Wholesale Corporation, Wal-Mart Stores Inc. and Ahold USA Retail Operations and major industrial ingredient customers, such as General Mills, Inc. and Unilever Bestfoods North America Foodservice. For the twelve months ended September 30, 2003, the egg products division represented approximately 69% and 72% of the net sales and the operating profit of our three divisions, respectively.

Potato Products. Our potato products division produces and distributes refrigerated potato products to the retail grocery and foodservice markets. Our products principally include hash browns and diced, sliced, mashed and other specialty potato products. The potato products division is the national market leader in refrigerated potato products with an estimated 55% share in the retail grocery market under the Simply Potatoes and Diner’s Choice brands and an estimated 60% share in the foodservice market, principally under the Northern Star and Farm Fresh brands. Our branded retail refrigerated potato products’ annual volume has doubled since 1997. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen potato products and, according to our consumer studies, have superior taste and texture characteristics. In addition, we use a production process that produces a 75-day shelf-life for our potato products, which we believe is the longest in the retail refrigerated potato products market. The potato products division’s largest customers include major retail grocery store chains, such as The Kroger Co., Publix Super Markets, Inc. and Food Lion LLC and major foodservice distributors, such as Sysco and U.S. Foodservice. For the twelve months ended September 30, 2003, the potato products division represented approximately 7% and 10% of the net sales and the operating profit of our three divisions, respectively.

Refrigerated Distribution. Our refrigerated distribution division is a distributor of over 400 branded and private label refrigerator case items to retailers and wholesale warehouses predominantly in the central United States. The refrigerated distribution division’s principal product line is its Crystal Farms branded cheese, which has a strong presence in the upper Midwest region of the United States and the largest market share for branded cheese in Minnesota. Crystal Farms branded cheese generated approximately $128.0 million of net sales in the twelve months ended September 30, 2003. This division also distributes shell eggs, bagels, butter, margarine and our refrigerated potato and other products. The refrigerated distribution division’s largest customers include major grocery retailers, such as SUPERVALU Inc./Cub Foods Stores and Roundy’s, Inc. For the twelve months ended September 30, 2003, the refrigerated distribution division represented approximately 24% and 18% of the net sales and operating profit of our three divisions, respectively.

Industry Trends

We believe that our specialty egg and refrigerated potato products are well positioned to continue capitalizing on the growth of the foodservice industry, which is being driven by increasing food consumption away from home. We also believe that the egg products division will benefit from several trends, including continued increases in processed egg consumption. Our business is influenced by the following industry trends:

Growth in Foodservice. According to the USDA, purchases of food prepared away from home in the United States have grown from 35.8% of total food purchases in 1975 to 46.1% in 2002, and we expect this trend to continue. The increase in foodservice sales has been largely driven by demographic changes, including the increases in personal disposable income, single parent households and dual income families. This growth in foodservice sales is expected to continue to lead to increased demand for processed food products. Additionally, we believe that the focus of the foodservice industry on increasing product safety, reducing preparation costs and outsourcing more of the food preparation process complements our product portfolio and new product development efforts.

Growth in Egg Consumption. According to the USDA, egg consumption increased at a compounded annual growth rate of 2.0% between 1991 and 2001. This growth was partially due to a shift in consumer perception of the health attributes of eggs, as well as new applications for eggs. In addition, we believe the recent increase in

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popularity of high protein, low carbohydrate diets has had a positive impact on egg consumption in the United States. In 2000, the American Heart Association revised its nutritional recommendations that limited the weekly intake of eggs. We believe this action helped improve the perception of eggs as a healthy part of a balanced diet.

Growth in Higher Value-Added Processed Egg Products. The growth in food consumption away from home and the development of new egg products has resulted in an increase in the production and consumption of processed egg products. According to the USDA, approximately 28.9% of all eggs consumed in the United States in 2001 were processed, up from approximately 21.7% in 1991. This represents a 4.9% compounded annual growth rate in consumption of processed eggs from 1991 to 2001 compared with an overall increase in the consumption of eggs at a compounded annual growth rate of 2.0% during that period. Requirements of the foodservice industry for food safety and concerns regarding product quality, consistency and convenience have served to increase the consumption of higher value-added egg products such as ESL liquid eggs and precooked eggs. We have witnessed this trend within our customer base as former shell egg purchasers such as Burger King and IHOP recognize the operational and economic benefits of processed egg products.

Consolidation in Foodservice Distribution Channel. Leading foodservice distributors continue to consolidate the foodservice industry in an effort to improve and broaden their product offerings, competitiveness and profitability. For example, according to ID Magazine, a foodservice industry publication, the top 20 foodservice distributors have increased their share of total industry sales from 22.5% in 1991 to 32.6% in 2001. As foodservice distributors consolidate, we believe they will increasingly choose to do business with national suppliers that have broad product lines and extensive service capabilities to meet both the scale and the scope of their operational requirements.

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Our Competitive Strengths

We believe that the following key competitive strengths will contribute to our continued success:

Extensive Portfolio of Specialty and Branded Products with Leading Regional and National Market Positions. We specialize in the development, production and distribution of specialty food products that address many of the needs of the foodservice and the retail markets. We have been successful in developing new and innovative products as evidenced by a broad portfolio of strong market positions and leading brands, as shown in the table below.

Division	Products	Key Brands	Market Position (1)
Egg Products	ESL liquid eggs Precooked eggs Hardcooked eggs Low/no cholesterol liquid eggs Other (2)	Easy Eggs Table Ready Better’n Eggs All Whites	No. 1 U.S. market share of processed egg products No. 1 U.S. market share of ESL liquid egg products No. 1 U.S. market share of precooked egg products No. 1 U.S. market share of hardcooked eggs No. 2 U.S. market share of retail low/no cholesterol egg products
Potato Products	Refrigerated cut and mashed potato products	Northern Star Simply Potatoes Diner’s Choice	No. 1 U.S. foodservice market share No. 1 U.S. retail market share
Refrigerated Distribution	Processed and wrapped cheeses and other products	Crystal Farms	No. 1 Minnesota market share for branded cheese Strong upper Midwest market share $128.0 million retail cheese brand

(1) Market position data is derived primarily from our own estimates, which are based on information we obtained from customers, distributors, suppliers and trade and business organizations.

(2) “Other” egg products include short shelf-life liquid eggs, dried eggs, frozen eggs and shell eggs.

Long-Standing Customer Relationships. Our high quality products, manufacturing scale and capability, extensive focus on customer service and customer-focused product development have helped us to build and retain a strong and diverse customer base. We have long-standing preferred supplier relationships with the major broad-line foodservice distributors, serving as their leading supplier of specialty egg and refrigerated potato products. In addition, we have long-standing relationships with many national restaurant chains that serve breakfast, major industrial ingredient companies and major retail grocery store chains. Our average length of relationship with our top ten egg products and potato products customers exceeds 10 years. We believe these long-standing relationships are the result of our high quality products and service levels.

Large Scale Operator with Efficient Manufacturing Operations. During the twelve months ended September 30, 2003, we processed approximately 1.3 billion pounds of eggs. We believe our significant annual volume combined with our diversified egg procurement and highly automated manufacturing facilities provide us with a cost advantage in the marketplace. Over the last six years, we have invested to expand our manufacturing capacity for value-added egg products, to upgrade our potato product operations, to improve and expand our distribution centers, to install a new company-wide management information system and to otherwise position ourselves for future growth. These investments include the installation of new precooked egg production lines, a

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new dried egg facility, automated packaging equipment and quality control systems. Additionally, our diverse geographic presence, with core manufacturing facilities in the Midwest and eastern United States, allows us to serve customers cost-effectively throughout the United States. We believe that our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for foodservice distributors, major restaurant chains and industrial ingredient companies.

Industry Leading Product Development Capability. We believe our innovation and product development continue to help us earn attractive margins for our specialty products. We conduct our research and development activities through designated facilities, including our state-of-the-art pilot plant for egg products in Gaylord, Minnesota. Our staff works closely with current and prospective customers to either adapt existing products to meet specific customer applications or to create and commercialize new customized specialty food products. Over the last few years, we have introduced, both independently and in conjunction with our customers, several new products and line extensions including precooked puffed egg patties and specialty dried eggs products. Products currently being test marketed include omelets for the retail market, precooked egg fillings for breakfast wraps, refrigerated French fries and French toast sticks.

Strong, Proven Management Team with Significant Equity Interest. We have an experienced and successful senior management team that has an average of over 20 years of food industry experience, each of whom has been with Michael Foods for over 10 years. The management team is headed by Gregg Ostrander, who has been our president and chief executive officer since 1994 and has 28 years of food industry experience, including management positions with Beatrice Foods Company and Armour Swift-Eckrich, a division of ConAgra Foods, Inc. Our management team has a strong track record of product innovation, cost containment and operating excellence during periods of both rising and falling commodity prices and while operating under a high degree of financial leverage. Our management team has increased our net sales and Adjusted EBITDA at a compound annual growth rate of 4.8% and 7.3%, respectively, from 1998 to the twelve months ended September 30, 2003, through product innovation, market share gains and careful cost management. Our management team has also successfully executed an operational turnaround and subsequent sale of our dairy products division. Furthermore, our senior management’s commitment to the business is evidenced by their equity investment of $33.0 million, representing, after the transactions, approximately 10.2% of the total equity invested in our company.

Strong and Stable Free Cash Flow Generation. Our business has generated strong free cash flow due to the combination of our sales growth, strong operating margins, stable egg products business and low capital expenditure and working capital requirements. As evidence of our strong free cash flow, we have reduced our total debt from approximately $602.3 million as of April 1, 2001, to $442.1 million as of September 30, 2003.

Our Business Strategy

Our strategy has enabled us to capitalize upon key industry trends, specifically the increases in both food prepared away from the home and the consumption of further-processed eggs. The primary components of our business strategy include the following:

Move Customers Up the “Value Chain.” We seek to continually transition our customers from lower value-added products to higher value-added, higher-margin products that offer improved food safety, reduced labor and waste and improved product quality and consistency. For example, in 1989 we worked with Burger King to help it transition from shell eggs to our value-added ESL liquid eggs and then, in 1998, to our higher value-added precooked egg patties. We believe this transition has reduced Burger King’s waste and labor costs and has improved product consistency nationwide. In 2002, we assisted IHOP in transitioning from shell eggs to ESL liquid eggs, and became its exclusive supplier of ESL liquid eggs. We believe assisting customers in these transitions will continue to drive our future financial performance. In addition, we are actively encouraging and assisting current and prospective customers who may wish to enter into, or expand their presence in, the profitable foodservice breakfast segment. For example, Sonic and Dunkin’ Donuts are using our precooked egg products as part of their evolving breakfast strategies.

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Capitalize On Growth Opportunities. We believe that significant growth opportunities exist in each of our divisions. We are focused on increasing our specialty egg products sales to quick service restaurants, coffee oriented venues and convenience stores that are seeking to grow revenues by either broadening their existing breakfast offerings or introducing a breakfast menu to add to their existing lunch and dinner offerings. For example, we have had success working with Sonic and Dunkin’ Donuts to introduce hot breakfast menus that include our high value-added egg products. We are also currently working with several major national restaurants to introduce a breakfast menu that includes our higher value-added egg products. In our potato products division, we plan to continue to participate in the fast growing refrigerated potato products market. According to ACNielsen Corporation, the retail refrigerated potato products category was the fastest growing segment of the retail potato products market from 2000 to 2002, exhibiting growth of 17% annually during that time period. In our refrigerated distribution division, we intend to expand our geographic reach and increase existing market penetration for our Crystal Farms branded cheese, while introducing new products and line extensions under the Crystal Farms label.

Continue Strategic Sourcing and Cost Reduction Programs. We began a strategic sourcing program in our egg products division in 2002 in an effort to improve efficiency in our procurement operations and reduce overall costs. Our strategy involves focusing our procurement efforts on our key suppliers and working with them on improving all aspects of the procurement process, including the egg and grain purchasing function and farm and plant operations. Enhanced communication and coordination with these key suppliers has served to streamline the procurement process and has already resulted in benefits to both our suppliers and to us. Additionally, we have increased volume commitments with our key suppliers in exchange for improved pricing and terms. We believe the strategic sourcing program will continue to provide us with operational and financial benefits, and we expect we will continue to see improved results from this program over the next several years.

In mid-2003, we began a purchasing and supply chain management, or PSM, initiative, with the goal of reducing our effectable spending in areas other than raw material procurement for our egg products division by a cumulative amount of $55.0 million between 2003 and 2007. This cost reduction initiative is focused on areas where our managers believe there are significant opportunities for cost improvement, such as potato and cheese purchases, freight, packaging materials, technology costs and other fixed overhead categories. We have formed a dedicated task force, which includes key managers from each of our divisions, to administer this initiative. The task force has identified several cost saving opportunities and initiated programs which have already resulted in cost savings.

Pursue Attractive Acquisition and Joint Venture Opportunities. We will continue to evaluate and selectively pursue acquisitions and joint ventures that expand our product offerings and/or geographic reach and broaden our technological expertise to complement our existing businesses. Since 1988, we have completed 17 acquisitions and three joint ventures, including the $106 million acquisition of Papetti’s Hygrade Egg Products, Inc. in 1997. The acquisition of Papetti’s significantly increased our market share, scale, geographic scope and offerings for our egg products division. In recent years, we have focused on making small strategic acquisitions. For example, in the past four years, we acquired Ingredient Supply LLC, which expanded our egg products division’s hardcooked eggs product line, acquired the egg products division of Canadian Inovatech, Inc., one of the largest providers of processed egg products in Canada, which greatly expanded our presence in international markets, particularly for the industrial ingredient market, and invested in foreign egg products joint ventures to expand the geographic coverage of our egg products division and pursue new technologies.

Egg Products Division

Our egg products division produces, processes and distributes a variety of egg products and shell eggs. Our egg products division is the largest producer of processed egg products in the United States with an estimated 44% share of the processed egg market and we believe it is three times larger than its closest competitor. We estimate that we currently have 58% share of the higher value-added segment of the United States processed egg market, which includes ESL liquid eggs, precooked egg patties and omelets, low/no cholesterol liquid eggs and

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hardcooked eggs. We believe our egg products division is the only North American egg products industry participant serving all market channels, foodservice, retail and industrial ingredient, with a comprehensive product line. During the twelve months ended September 30, 2003, the egg products division processed approximately 1.3 billion pounds of eggs through its integrated facilities. The division focuses on producing higher value-added egg products that we believe are safe, easy to prepare and consistent in quality.

Demand for higher value-added egg products in both the retail and foodservice markets has been driven by the following factors:

Food Safety	Processed egg products are pasteurized and quality controlled, which reduces the likelihood of contamination. As a result, foodservice companies and major restaurant chains are choosing processed egg products as a lower-risk alternative to unprocessed eggs.
Labor Reduction/Ease of Use	Processed egg products require less preparation time, reducing labor costs for foodservice companies and increasing convenience for individual purchasers.
Product Quality and Consistency	Foodservice companies and national restaurant chains require consistency of products throughout their operations. Processed egg products, particularly precooked egg products which are produced to distinct specifications, provide foodservice companies and national restaurant chains with a processed egg product that provides a more consistent taste, quality and serving size than shell eggs.
Efficiency/Waste Reduction	Processed egg products reduce the need for disposal of partially used product and have fewer packaging and space requirements.

Products. Our higher value-added processed egg products are detailed below:

ESL liquid eggs: We have an estimated 62% market share in the ESL liquid egg market in the United States. These products are packaged in cartons and bag-in-box packaging principally for use in foodservice markets. We use proprietary ultra-high temperature pasteurization processes to produce our ESL liquid eggs. These processes produce an egg product that is salmonella and listeria-negative, as defined by federal law, with a refrigerated shelf-life of up to three months. Our ESL egg products are marketed under the Easy Eggs and Table Ready brand names.

Precooked eggs: We are the leader in precooked omelets and egg patties with an approximate 60% market share in the United States. These products are fully-cooked and packaged at the manufacturing facility and then reheated at the point of consumption. Foodservice companies and quick service restaurant chains find these products attractive because they can reduce labor costs and waste, improve consistency and require only a minimal infrastructure investment. We will continue to direct significant production and marketing resources to this product as usage increases.

Low/no cholesterol eggs: We hold the number two market share position in the United States in the retail egg substitutes category and believe we also hold the number two market share in the United States foodservice egg substitutes category. These egg products consist primarily of egg whites sold in retail grocery market under the names Better ’n Eggs, and All Whites. Egg substitutes are increasingly popular among health conscious consumers, and are developing a high level of acceptance in the retail market.

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Hardcooked eggs: We believe that we hold an approximate 60% market share in the hardcooked egg market in the United States. These products are hard-boiled eggs, which are packaged in pails with brine solution or in modified atmosphere packs that are designed to increase both shelf-life and food safety. Hardcooked eggs are sold primarily to foodservice accounts for use in salads and other dishes.

In addition, our other egg products include frozen eggs, short shelf-life liquid eggs and dried eggs that we supply in order to provide our customers with a broad range of egg products. We believe we are the leading processor of these types of products. Frozen eggs are used primarily by foodservice and industrial ingredient customers. Short shelf-life liquid eggs are liquid eggs packaged with standard pasteurization and are convenient for industrial ingredient customers, such as bakeries, who will use a large quantity of eggs within a short time period to produce other products. Dried eggs are used primarily by industrial ingredient customers in the production of mayonnaise, salad dressings and baking mixes.

Customers. The egg products division has long-standing preferred supplier relationships with many of its customers. Our customers include many of the major broad-line foodservice distributors and many national restaurant chains that serve breakfast. As the largest processed egg producer in the industry, we offer our customers a broad product selection, large-scale manufacturing capabilities and specialized service. The egg products division’s major customers in each of its market channels include leading foodservice distributors, such as Sysco and U.S. Foodservice, national restaurant chains, such as Burger King, International House of Pancakes, Sonic Corp. and Dunkin’ Donuts, major retail grocery store chains, such as Costco, Wal-Mart and Ahold group stores and major industrial ingredient customers, such as General Mills, Inc. and Unilever Bestfoods North America Foodservice.

The strength of the egg products division’s customer base is demonstrated by low turnover and the long-standing nature of the relationships, exemplified by an average relationship length in excess of ten years for its top ten customers. As an example of this type of relationship, the egg products division has a five year preferred supplier contract (terminable upon six months notice) with U.S. Foodservice pursuant to which we supply a substantial majority of U.S. Foodservice’s egg products needs. This relationship is over 20 years old. Our volume with U.S. Foodservice grew 7% during 2002 and we estimate it will be up approximately 9% in 2003.

Competition. The egg processing industry is heavily concentrated, especially when compared to the shell egg industry. Sunny Fresh Foods, a subsidiary of Cargill, is our largest higher value-added egg products competitor. We also compete with other egg products processors including Sonstegard Foods Company, Rose Acre Farms, Inc., Echo Lake Farm Produce, Cutler Egg Products, Inc. and ConAgra Foods.

Sales and Marketing. The division distributes its egg products to food processors and foodservice customers primarily throughout the United States, with international sales in the Far East, South America and Europe. The largest selling product line within the egg product division, ESL liquid eggs, and other egg products are marketed nationally to a wide variety of food service and industrial ingredient customers. Nearly all of the division’s annual shell egg sales are made to our refrigerated distribution division, which, in turn, distributes them predominantly in the central United States.

In 2002, the egg products division derived approximately 97% of net sales from egg products, with 3% of net sales coming from shell eggs. Pricing for shell eggs and certain egg products in the United States reflects levels reported by Urner Barry. Prices of certain higher value–added egg products, such as ESL liquid eggs, egg substitutes, and hardcooked and precooked egg products, typically are not significantly affected by Urner Barry quoted price levels. These products accounted for approximately 64% of the egg product division’s 2002 sales. Prices for the egg products division’s other products, including frozen and short shelf-life liquid eggs, certain dried products and, particularly, shell eggs, are significantly affected by frequently changing market levels as reported by Urner Barry.

Sales Dynamics. The egg products division’s supply agreements with its customers typically last one year. These contracts generally stipulate a number of conditions including the types of products to be supplied, volume

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targets, pricing levels (with weekly, monthly, quarterly or annual revision options), discount options, delivery and other logistical and administrative parameters. The contracts are not “take or pay” contracts and typically can be terminated early without penalty. We sell our egg products based on a mix of variable, semi-variable and fixed price contracts, of which variable contracts constitute a significant portion. Sales of egg products under variable priced sales contracts are tied to a pricing index, either an Urner Barry egg market or grain index. Price changes under these sales contracts are based on a formula and generally allow for a pass-through of cost increases. Our semi-variable sales contracts generally allow us to change prices by giving 30 to 60 days notice. These contracts are with major broad-line foodservice distributors who are generally less sensitive to price increases because their customers purchase food products from them on a cost-plus basis. Our fixed price egg products sales contracts generally have durations of up to one year and maturity dates that are generally staggered throughout the year, effectively reducing our commitment to fixed priced contracts. We use fixed price contracts because our large national foodservice customers require fixed pricing in order to manage the prices at which they sell their products.

Suppliers. In 2002, the egg products division produced approximately a third of its shell egg requirements at multiple internal egg production facilities. A majority of the remainder of the division’s egg requirements are purchased under contracts with numerous cooperatives and egg producers at prices primarily derived from grain-based costs and Urner Barry market indices. No egg supplier provides more than 10% of the division’s annual egg requirements.

Commodity Risk Management. Since variable costs, principally feed costs and the cost to purchase eggs, represent a large percentage of the total costs of our egg products, significant price fluctuations in these raw materials could have an adverse affect on our results of operations. See “Risk Factors—Risk Relating to Our Company, Our Industry and the Industries We Serve—Our operating results are significantly affected by egg, potato and cheese market prices and the prices of other raw materials, such as grain, which can fluctuate widely.” Historically, feed costs have generally been less volatile than egg market prices. Internally produced eggs typically cost less than eggs we purchase from our suppliers. We partially hedge key feed costs, such as corn and soybean meal, by using futures and other purchase contracts. There is no market mechanism for hedging egg prices. The egg products division has endeavored to moderate the effects of egg market commodity factors through an emphasis on value-added products and the internal production of eggs, where egg cost is somewhat controllable. Further, the egg products division attempts to match market-affected egg sourcing with the production of egg products whose selling prices are also market-affected, and cost-affected egg sourcing, as best can be managed, with higher value-added products priced over longer terms, generally 6-12 months. The former allows the division to typically realize a modest processing margin on such sales, even though there are notable commodity influences on both the egg sourcing cost and the egg products pricing, with each changing as frequently as daily. Shell eggs are essentially a commodity and are sold based upon reported egg prices. Egg prices are significantly influenced by modest shifts in supply and demand. Pricing of shell eggs is also typically affected by seasonal demand related to increased consumption during holiday periods. Our operating profit is significantly affected by egg market prices and prices of other raw materials, such as grain, which can fluctuate widely. We have a risk management strategy to mitigate these risks. For more information on our risk management strategy, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commodity Risk Management.”

Facilities. Our principal egg processing plants are located in New Jersey, Minnesota, Nebraska, Pennsylvania, Iowa, Manitoba and Ontario. Certain of our facilities are fully integrated from the production and maintenance of laying flocks through the processing of eggs products. Fully automated laying barns, housing approximately 13.4 million producing hens, are located in Nebraska, Minnesota and South Dakota, of which approximately 1.6 million are housed in contract facilities. Major laying facilities also maintain their own grain and feed storage facilities. We also maintain facilities with approximately 2.8 million pullets, or hens that are less than 16 weeks old.

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Potato Products Division

The potato products division produces and distributes refrigerated potato products to the retail grocery and foodservice markets. This division’s products principally include hash browns and diced, sliced, mashed and other specialty potato products. The potato products division is the national market leader in refrigerated potato products with an estimated 55% share in the retail grocery market under the Simply Potatoes and Diner’s Choice brands and an estimated 60% share in the foodservice market, principally under the Northern Star and Farm Fresh brands. Our branded retail refrigerated potato products’ annual volume has doubled since 1997. Due to their freshness and quality, refrigerated potato grocery products are generally sold at higher price points than frozen potatoes and, according to our consumer studies, have superior taste and texture characteristics. In addition, we use a production process that produces refrigerated potato products for retail having a shelf-life of 75 days, which we believe to be the longest shelf-life in this category. The shelf-life of our competitors’ retail products are advertised as being approximately 45 to 60 days.

Products. The potato products division produces and sells refrigerated hash browns, diced, sliced, mashed and other specialty potato products which are marketed to the foodservice market under the Northern Star, Farm Fresh and Quality Farms brand names and under the Simply Potatoes and Diner’s Choice brand names to the retail market. Historically, the Simply Potatoes brand has achieved consistent growth despite minimal consumer advertising expenditures.

Growth in the potato products division is the result of several factors, including the growth in specialty potato products and increasing consumer awareness of the refrigerated potato category. For example, refrigerated mashed potatoes continue to be a popular category in both the retail and foodservice markets, particularly special recipe mashed potatoes, including deluxe mashed potatoes (prepared with butter and sour cream), seasoned mashed, red skin garlic mashed and mashed with onion. The potato products division’s ability to create such customized mashed potato products has attracted interest from chain restaurants in the foodservice market, such as International House of Pancakes, which use these blends as signature menu items. In addition, we have had success with other products such as special cut potatoes, including thick-sliced russets and red skin wedges, and seasoned hash browns.

We have invested significant capital in our Minneapolis potato processing facility, including re-designing the plant layout and upgrading the equipment. Since 1997, production yields have improved, labor costs have declined and gross profit per pound has increased to 31.7% for the twelve months ended September 30, 2003 compared to 22.5% in 1997.

Customers. The potato products division leverages existing relationships with national foodservice distributor customers of our egg products division. Many of our top potato products division’s customers are also long-standing customers of the egg products division. We provide foodservice distributors the convenience of centrally sourcing many different types of refrigerated potato and egg products. The potato products division’s largest customers include major foodservice distributors, such as Sysco and U.S. Foodservice and major retail grocery store chains, such as Kroger, Publix and Food Lion. These relationships provide a foundation for our potato products division and provide potential growth opportunities.

Competition. We were the first to introduce nationally branded refrigerated potato products in the late 1980s to the United States’ foodservice and retail markets. We are currently the largest processor and distributor by volume in the United States of a broad-line of refrigerated potato products. The potato products division’s largest competitor is Reser’s Fine Foods Inc., a national producer of refrigerated products. Other competitors include Bob Evans Farms Inc. and Yoder’s as well as smaller local and regional processors, including I&K Distributors, Inc. and Naturally Potatoes. In the broader potato products category, other large national producers, particularly those that produce frozen potato products, compete indirectly with our potato products division.

Suppliers. A high-quality, consistent-cost potato supply is important to the potato products division’s profitability. Historically, potato prices have remained relatively stable. A substantial portion of our annual

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potato requirements are met through contracts with potato producers, with a high percentage of such production coming from irrigated land, allowing for relatively consistent raw material quality. In addition, the potato products division contracts with a geographically diverse supplier group to hedge weather and quality risk. The remaining portion of the potato products division’s potato requirements are purchased on the spot market. Potatoes are mainly sourced from Minnesota, North Dakota and Wisconsin, with lesser quantities sourced from California, Idaho, Oregon and Nevada.

Refrigerated Distribution Division

The refrigerated distribution division is a leading distributor of refrigerated products to retailers and wholesale warehouses predominantly in the central region of the United States. The refrigerated distribution division distributes its own Crystal Farms branded cheese, with sales for the twelve months ended September 30, 2003 of approximately $128.0 million. With a reputation for quality and a market position between national brands such as Kraft and private label brands, Crystal Farms cheese drives this division’s sales and profitability. In addition, the refrigerated distribution division distributes a wide range of refrigerated food products primarily on a direct-store-delivery basis, offering customers a high level of service and quality alternatives to nationally branded products. The refrigerated distribution division has strong distribution capabilities with over 400 different branded and private label refrigerated food products.

Products. The refrigerated distribution division offers a broad selection of refrigerated products, which consist principally of cheese, eggs, bagels, butter, margarine, muffins, potato products, juice and ethnic foods, such as corn and flour tortillas. Cheese products are the refrigerated distribution division’s most significant entry point with new customers. While most of the division’s products are supplied by vendors or our other divisions, the refrigerated distribution division operates a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products acquired in bulk from third-party suppliers for its Crystal Farms brand and its private label customers.

The refrigerated distribution division has historically taken its products to market on a direct-to-store delivery basis and it has more recently experienced success dealing with larger chains and wholesalers through warehouse delivery of goods. The refrigerated distribution division is working with retailers and wholesalers to develop partnerships and to respond to the changing needs of the food industry.

Customers. The refrigerated distribution division has customer relationships with large food store chains that rely on us to deliver a variety of dairy case products in a timely and efficient manner. For the year ended December 31, 2002, the division served approximately 4,800 retail locations, inclusive of stores receiving products through warehouse delivery. SUPERVALU Inc., or SUPERVALU, the food industry’s largest distributor, is the refrigerated distribution division’s largest customer. For the twelve months ended September 30, 2003, sales to warehouse operations of SUPERVALU and SUPERVALU-owned and franchised stores, including Cub Foods Stores, bigg’s, Shopper’s Food Warehouse and Farm Fresh, accounted for approximately 43% of the refrigerated distribution division’s sales. Other principal customers include Roundy’s, Coborn’s Inc., Nash-Finch Company and Wal-Mart Stores, Inc.

Competition. While the division competes with the refrigerated products of larger suppliers such as Beatrice, Kraft, Land O’ Lakes, Inc. and Sargento Foods Inc., we believe that we have successfully positioned Crystal Farms as an alternative mid-priced brand, operating at price points below national brands and above retail store brands. The refrigerated distribution division’s emphasis on a high level of service and lower-priced branded products has enabled it to compete effectively with much larger national brand companies. We believe that Crystal Farms branded cheese currently has an estimated 3% market share in the United States and an estimated 45% market share in Minnesota.

Suppliers. This division obtains products from a number of different co-packers and, in the case of cheese, purchases the product in bulk and repackages it under the Crystal Farms brand and private labels.

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Sales, Marketing and Customer Service

Each of our three divisions has developed a marketing strategy, which emphasizes high product quality and superior customer service. Michael Foods Sales, an internal sales group, coordinates the foodservice and retail sales of the egg products and potato products divisions, primarily for national and regional accounts, and is supported by a centralized order entry and customer service staff. A group of foodservice brokers is used by Michael Foods Sales to supplement its internal sales efforts. In addition, the egg products division uses a separate nationwide system of brokers for the retail market. That division also maintains a small sales group which handles certain industrial egg product sales. We employ a small marketing staff, which executes marketing plans in the foodservice market, with additional resources available from outside agencies and consultants as needed. In addition, the egg products division has a consumer support program to support several of its egg products which are sold in the retail market.

The refrigerated distribution division’s internal and external sales personnel obtain orders from retail stores which are usually placed no more than one day ahead of the requested delivery date. That division’s marketing efforts are primarily focused on in-store and cooperative advertising programs, which are executed with grocers on a market-by-market basis. Beginning in 1999, Crystal Farms increased its consumer marketing support efforts by using television, radio, outdoor and in-store programs, with favorable sales volume results.

Proprietary Technologies and Trademarks

We use a combination of patent, trademark and trade secrets laws to protect the intellectual property for our products. We own patents and have exclusive license agreements for several patents and technologies. In 1988, we obtained an exclusive license agreement to use patented processes developed and owned by North Carolina State University involving the ultrapasteurization of liquid eggs. Four of the five patents licensed to us under this agreement expire in 2006. Our license to use these four patents will continue until the expiration of the patents. The patented technology produces liquid eggs that are salmonella and listeria-negative, as defined by federal law, and extends the shelf-life of liquid eggs from less than two weeks to over ten weeks.

We also own an exclusive license to use a patented process, owned and developed by the University of Missouri, to eliminate salmonella from shell eggs. The licensed patents are set to expire in 2014. Our license to use these patents will also continue until the expiration of the patents. We currently use this technology for processing in-shell pasteurized eggs sold through our refrigerated distribution division. We also have acquired licenses to other patents and technology from other third parties, including the University of Nebraska.

We believe that certain of our competitors infringe upon some of our patents and the patents licensed to us. We, along with North Carolina State University, have initiated litigation against several processors of competing liquid egg products claiming infringement of the original and subsequent related process patents licensed to us by North Carolina State University relating to ultrapasteurized liquid egg production. In 1992, a jury for the United States District Court for the Middle District of Florida found the original patent to be valid and that a processor, Bartow Food Co., willfully and deliberately infringed one of the patents. In another action, the United States District Court for the District of New Jersey found in 1992 and 1993 that Papetti’s had infringed certain of the patents and that the licensed patents are valid and enforceable. In 1994, the Court of Appeals for the Federal Circuit upheld this judgment. In 1993, Nulaid Foods Inc., or Nulaid Foods, sought a declaratory judgment that the licensed patents are invalid. This action was subsequently settled, and Nulaid Foods agreed that it would not contest the validity and enforceability of the patents as well as their past infringement of the patents. Nulaid Foods is currently using the patented process by operating under a sublicense agreement. Reissue and reexamination proceedings were initiated by us and our competitors with the U.S. Patent and Trademark Office, or PTO, seeking to determine the scope and validity of some of the patents that we license from North Carolina State University. The PTO ruled that claims in the licensed patents are valid and in full force and effect. In 2000, Sunny Fresh Foods, a division of Cargill, filed an action seeking declaratory judgment that Sunny Fresh Foods does not infringe upon some of our licensed patents and that the licensed patents are invalid. In August 2003, a jury found the patents to be valid and enforceable, but ruled that Sunny Fresh Foods has not infringed the

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licensed patents. We have filed an appeal to reverse the non-infringement ruling. Infringement litigation actions were recently settled with two other egg processors, Rose Acre Farms and Cutler Egg Products. Both parties agreed that the patents are valid and enforceable. Both parties are now operating under sublicense agreements. For more information, see “—Legal Proceedings.”

Although we believe that our competitors may be deterred from competing with us because of our active enforcement of our patent rights, we do not believe that the expiration of our patent rights will have a material adverse affect on our business or market share within the corresponding product segments because of our processing expertise, strong market position and cost-efficiencies due, in part, to scale.

The egg products division maintains numerous trademarks and/or trade names for its products, including “Logan Valley,” “Sunny Side Up,” “Michael Foods,” “Deep Chill,” “Simply Eggs Brand,” “Better ‘n Eggs,” “All Whites,” “Chef’s Omelet Brand,” “Express Eggs,” “Quaker State Farms,” “Broke N’ Ready,” “Canadian Inovatech,” “Centromax,” “Centrova,” “Emulsa,” and “Inovatech.” Ultrapasteurized liquid eggs are marketed using the “Easy Eggs” and “Table Ready” trade names.

Within the potato products division, we market our refrigerated potato products to foodservice customers under a variety of brands, including “Northern Star,” “Farm Fresh” and “Quality Farms.” The “Simply Potatoes” and “Diner’s Choice” brands are used for retail refrigerated products.

Refrigerated distribution division products are marketed principally under the “Crystal Farms” trade name.

Food Safety

We believe that we take extensive precautions to ensure the safety of our products. In addition to routine inspections by state and federal regulatory agencies, including continuous USDA inspection of many facilities, we have instituted quality systems plans in each of our divisions which address topics such as supplier control, ingredient, packaging and product specifications, preventive maintenance, pest control and sanitation. Each of our facilities also has in place a hazard analysis critical control points plan which identifies critical pathways through which contaminants may enter our facilities and mandates control measures that must be used to prevent, eliminate or reduce all relevant foodborne hazards. For example, at our egg products division facilities, sanitization and pasteurization steps are in place to eliminate the risk of microbial contamination of our employees entering certain facilities use, including the use of, foot baths to reduce the risk of product contamination. Each of our divisions has also instituted a product recall plan, including lot identifiability and traceability measures, that allows us to act quickly to reduce the risk of consumption of any product of which we suspect a problem.

Recently, we engaged a third-party food regulatory consulting firm to assess our food regulatory compliance. This firm focused on our ability to ensure the safety of our food products for human consumption. Based on its review of our regulatory reports and documents, as well as site visits, the consulting firm concluded that no significant food safety issues have been found.

In March 2003, Belovo S.A., our egg products joint venture in Belgium, notified the Belgian government of a potential processed egg powder contamination issue. Following the notification, production ceased for a month and the egg powders were recalled. The Belgian government held the egg powder in quarantine. As of December 31, 2003, approximately 60% of the quarantined inventory (measured by value) has been released. Belovo is working with the Belgian government to resolve the status of the remaining inventory. The potential loss, if any, related to this matter has not been determined. However, we expect that governmental relief and product liability insurance coverage will mitigate the financial impact of this recall.

In November 2000, the refrigerated distribution division initiated a recall of 60,000 pounds of two cheese products manufactured by a co-packer due to a possible contamination of listeria. No illnesses were reported with the recall, and the impact on the refrigerated distribution division’s sales and earnings was minimal. Our

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co-packer paid all costs associated with the recall. We were the first company to recall the cheese, which had been produced for numerous firms nationally, and through our direct share distribution network we were able to rapidly collect the recalled product.

We currently maintain general liability insurance coverage, including product liability insurance, which we believe to be sufficient to cover potential product liabilities.

Government Regulation

All of our divisions are subject to federal, state and local government regulations relating to grading, quality control, product branding and labeling, waste disposal and other aspects of their operations. Our divisions are also subject to USDA and FDA regulation regarding grading, quality, labeling and sanitary control. The processing plants of our egg products division that break eggs, and some of our other egg processing operations, are subject to continuous on-site USDA inspection. All of our other processing plants are subject to periodic inspections by the USDA, FDA and state regulatory authorities.

Crystal Farms cheese and butter products are affected by milk price supports established by the USDA. The support price serves as an artificial minimum price for these products, which may not be indicative of market conditions that would prevail if these supports were abolished. A substantial portion of the egg production operations of our egg products division are located in the State of Nebraska. With certain exceptions, a provision of the Nebraska constitution generally prohibits corporations from engaging in farming or ranching in Nebraska. Although the constitutional provision contains an exemption for agricultural land operated by a corporation for the purpose of raising poultry, the Nebraska Attorney General has, in written opinions, taken the position that facilities devoted primarily to the production of eggs do not fall within such exemption and therefore are subject to the restrictions contained in the constitutional provision. We believe that our egg production facilities in Nebraska are part of integrated facilities for the production, processing and distribution of egg products, and therefore, that any agricultural land presently owned by us in Nebraska is being used for non-farming and non-ranching purposes.

The constitution empowers the Nebraska Attorney General, or if the Attorney General fails to act, a Nebraska citizen, to obtain a court order to, among other things, force a divestiture of land held in violation of this constitutional provision. If land subject to such a court order is not divested within a two-year period, the constitutional provision directs the court to declare the land escheated, or forfeited, to the State of Nebraska. We are not aware of any proceedings under this over 75 year-old constitutional provision pending or threatened against us or any other companies engaging in farming or ranching activities in Nebraska. We believe that we have adequate contingency arrangements in place in the event a determination is made that we engage in farming and/or ranching activities proscribed by the Nebraska constitution. Until the scope of such provision has been clarified by further judicial, legislative, or executive action, there can be no assurance as to the effect, if any, that it may have on our egg products division.

Environmental Regulation

We are subject to federal, state and local environmental regulations and requirements, including those governing discharges to air and water, the management of hazardous substances, the disposal of solid and hazardous wastes, and the remediation of contamination.

We have an ongoing relationship with an environmental consulting firm that aids us in our environmental compliance efforts. As a result of our efforts, we believe we are currently in material compliance with all environmental regulations and requirements. Nonetheless, as is the case with any business, if we do not fully comply with environmental regulations, or if a release of hazardous substances occurs at or from one of our facilities, we may be subject to penalties and/or held liable for the cost of remedying the condition.

Many of our facilities discharge wastewater pursuant to wastewater discharge permits. We dispose of our waste from our internal egg production primarily by providing it to farmers for use as fertilizer. We dispose of our solid waste from potato processing by selling the waste to a processor who converts it to animal feed.

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We received a request for information from the U.S. Environmental Protection Agency, or the EPA, in July 2003 regarding the wastewater disposal practices and procedures of all of our facilities in and around Wakefield, Nebraska. We responded to this request for information in September 2003. We have received no communication from the EPA regarding our response.

We have made, and will continue to make, expenditures to comply with environmental requirements. We have upgraded the wastewater treatment system at our Klingerstown, Pennsylvania facility. We have paid the city of Lenox, Iowa the cost to construct and have agreed to continue to pay Lenox to operate a wastewater treatment plant used by our facility located there. In addition, we updated our wastewater system at our egg production facility in Bloomfield, Nebraska in 2002. These expenditures have reduced the current and future risk of wastewater violations at these facilities. We are reviewing the adequacy of our wastewater treatment systems at the egg products division’s facility in Gaylord, Minnesota. We may elect to upgrade the wastewater controls at this facility or we may be required to upgrade such controls in the future. In response to ongoing discussions with environmental regulators in New Jersey relating to wastewater discharges at our Elizabeth, New Jersey facilities, we may be required to pay certain fines and to upgrade the wastewater treatments systems at these facilities. However, we do not anticipate being required to make any material capital expenditures for such upgrades in the foreseeable future.

Facilities

Corporate. We maintain leased space for our corporate headquarters, customer service office, sales office and information services group in suburban Minneapolis, Minnesota. Leased space within the same building houses the headquarters, financial and administrative service staffs of the egg products and potato products divisions, as well as our customer service, distribution, sales, marketing and information services groups.

Egg Products Division. The following table summarizes information relating to the primary facilities of our egg products division:

Location	Principal Use	Size (square feet)	Owned/Leased
Elizabeth, New Jersey	Processing	75,000	Leased
Elizabeth, New Jersey	Processing	125,000	Leased
Bloomfield, Nebraska	Processing	80,000	Owned
LeSueur, Minnesota	Processing	29,000	Owned
Wakefield, Nebraska	Processing	380,000	Owned
Klingerstown, Pennsylvania	Processing and Distribution	139,000	Leased
Klingerstown, Pennsylvania	Processing and Distribution	19,000	Leased
Lenox, Iowa	Processing and Distribution	143,000	Owned
Gaylord, Minnesota	Processing and Distribution	230,000	Owned
Elizabeth, New Jersey	Sales and Distribution	80,000	Leased
Bloomfield, Nebraska	Egg Production	619,000	Owned
Wakefield, Nebraska	Egg Production	658,000	Owned
LeSueur, Minnesota	Egg Production	345,000	Owned
Gaylord, Minnesota	Egg Production	349,000	Owned
Gaylord, Minnesota	Pullet Houses	130,000	Owned
Wakefield, Nebraska	Pullet Houses	432,000	Owned
Plainview, Nebraska	Pullet Houses	112,000	Owned
Winnipeg, Manitoba	Processing	102,000	Leased
St. Mary’s, Ontario	Processing	42,000	Leased
Mississauga, Ontario	Distribution	8,000	Leased
Abbotsford, British Columbia	Sales Office	5,000	Leased

The egg products division owns or leases, primarily for egg production operations, approximately 1,600 acres of land in Nebraska and Minnesota.

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Potato Products Division. The potato products division owns a processing plant and land located in Minneapolis, Minnesota, consisting of approximately 175,000 square feet of production area. This division leases a building in North Las Vegas, Nevada, consisting of approximately 31,000 square feet.

Refrigerated Distribution Division. The refrigerated distribution division leases administrative and sales offices in suburban Minneapolis and several small warehouses across the United States, including a 17,000 square foot distribution center in Hudson, Colorado. It owns a distribution center located near LeSueur, Minnesota, which is approximately 33,000 square feet. The refrigerated distribution division also owns and operates a 48,200 square foot refrigerated warehouse and a 19,000 square foot cheese packaging facility on a 19 acre site in Lake Mills, Wisconsin.

The total annual base rent of the facilities described above is approximately $4.4 million. The leases for these facilities have varying length terms ranging from month-to-month to 2017. We believe that our owned and leased facilities, together with budgeted capital projects in each of our three operating divisions, are adequate to meet anticipated requirements for our current lines of business for the foreseeable future. All of our owned property are pledged to secure repayment of our senior credit facility.

Employees

At December 31, 2003, we had 3,806 employees. The egg products division employed 2,694 full-time and 208 part-time employees none of whom are represented by a union. The potato products division employed 254 persons, 183 of whom were represented by the Bakery, Laundry, Allied Sales Drivers and Warehousemen Union, which is affiliated with the Teamsters. The refrigerated distribution division employed 514 employees, none of whom are represented by a union. Our corporate, sales, distribution and customer service and information systems groups collectively employed 136 people at December 31, 2003.

Legal Proceedings

Four patents for ultrapasteurizing liquid eggs licensed to us by North Carolina State University were involved in proceedings before the PTO. In 1996, an examiner rejected certain claims under these patents as a result of challenges from competitors. We and North Carolina State University appealed this rejection to the PTO’s Board of Patent Appeals and Interferences, or the PTO Board. In September 1999, we and North Carolina State University received a favorable ruling whereby the PTO Board reversed the examiner’s rejection of the claims made under the patents. As a result of these proceedings, process claims of all four patents continue to be valid and in full force and effect. Also, the fourth patent was reissued in 2001 to include product claims.

On September 13, 2000, Sunny Fresh Foods, a division of Cargill, filed a declaratory judgment action in the United States District Court for the District of Minnesota requesting the adjudication of the unenforceability and invalidity of those patents exclusively licensed to us by North Carolina State University. In August 2003, a jury found the patents to be valid and enforceable, but ruled that Sunny Fresh Foods has not infringed the licensed patents. We have filed an appeal to reverse the non-infringement ruling. We also settled litigation regarding infringement of these patents with Rose Acre Farms and Cutler Egg Products in January 2004.

In addition, we are from time to time party to litigation, administrative proceedings and union grievances that arise in the ordinary course of our business. We do not have pending any litigation that, separately or in the aggregate, would in the opinion of management have a material adverse effect on our results of operations or financial condition.

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MANAGEMENT

Directors, Executive Officers and Key Employees

Michael Foods is a wholly owned subsidiary of Holdings, a corporation owned by MF Investors, whose members include affiliates of Thomas H. Lee Partners, L.P. and members of our senior management. Each member of the management committee of MF Investors is also a director of Michael Foods. For more information, see “Certain Relationships and Related Transactions—Certain Agreements Relating to the Acquisition—Securityholders Agreement.”

The names of the executive officers, directors and key employees of Michael Foods, and their ages and positions, are as follows:

Name	Age	Position
Gregg A. Ostrander	50	President, Chief Executive Officer and Chairman
James D. Clarkson	51	Chief Operating Officer
John D. Reedy	58	Executive Vice President, Chief Financial Officer
Mark D. Witmer	46	Treasurer and Secretary
Mark B. Anderson	43	President—Refrigerated Distribution Division
Max R. Hoffmann	45	Chief Financial Officer—Refrigerated Distribution Division
James Mohr	51	Senior Vice President—Supply Chain Logistics
Todd M. Abbrecht	35	Director
Anthony J. DiNovi	41	Director
Jerome J. Jenko	65	Director
Kent R. Weldon	36	Director

Gregg A. Ostrander is our President and Chief Executive Officer and has held these positions since 1994. Mr. Ostrander has also been our Chairman since 2001. Mr. Ostrander has been a director of Michael Foods since 1994. In 1993, Mr. Ostrander served as our Chief Operating Officer. From 1989 to 1993, prior to joining Michael Foods, Mr. Ostrander was President of the Armour Swift-Eckrich Prepared Food Division, a division of ConAgra Foods. From 1986 to 1989, Mr. Ostrander served as a Vice President of Marketing and Senior Vice President of Marketing for Armour Swift-Eckrich. Prior to that time, Mr. Ostrander was employed by Beatrice Foods Company for ten years serving most recently as its Director of Marketing. Mr. Ostrander is also a director of Arctic Cat Inc. and Birds Eye Foods, Inc.

James D. Clarkson is our Chief Operating Officer, a position he was appointed to in January 2004. Prior to this appointment, Mr. Clarkson was President of our potato products and refrigerated distribution divisions, positions he held since 1995 and 2002, respectively. Mr. Clarkson joined us in 1994 as Vice President and General Manager of Crystal Farms, a subsidiary of our refrigerated distribution division. Prior to joining us, Mr. Clarkson worked in the Lykes Pasco organization as an Industrial Engineer and Warehouse Manager for three years, at Pillsbury/Green Giant as Production Superintendent for four years and in various assignments with Armour Swift-Eckrich, most recently as Vice President and General Manager of the Armour Business.

John D. Reedy is our Executive Vice President and Chief Financial Officer and has held these positions since 2000. From 1988 to 2000, Mr. Reedy was our Vice President—Finance and Chief Financial Officer. Prior to joining Michael Foods in 1988, Mr. Reedy was at Grant Thornton LLP for 18 years, most recently as an Audit Partner.

Mark D. Witmer is our Treasurer and Secretary. Mr. Witmer has held the former position since 2003 and the latter since 2001. Mr. Witmer joined Michael Foods as the Director of Corporate Communications in 1989. From 1986 to 1989, prior to joining us, Mr. Witmer was a Partner and research analyst at Wessels, Arnold & Henderson, an institutional brokerage firm.

Mark B. Anderson is the President of our refrigerated distribution division, a position he has held since January 2004. From 2002 to 2003, Mr. Anderson served as Vice President/General Manager of the division. From 1995 to 2001, Mr. Anderson served as Controller of the division.

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Max R. Hoffmann is the Chief Financial Officer for our refrigerated distribution division, a position he has held since early 2002. From 1995 to 2003, Mr. Hoffman served as Chief Financial Officer of our potato products division. He previously served as Controller of the refrigerated distribution division from 1993 to 1995. From 1986 to 1993, Mr. Hoffmann served as Assistant Controller of the refrigerated distribution division.

James Mohr is our Senior Vice President—Supply Chain Logistics, a position he has held since January 2004, having previously served as Vice President—Supply Chain Logistics since 1996. From 1994 to 1996, he was the Vice President of Distribution for Crystal Farms, a subsidiary of our refrigerated distribution division. Prior to joining us in 1994, Mr. Mohr was a Distribution Center Manager at Armour Swift-Eckrich from 1987 to 1994.

Todd M. Abbrecht has been a director of Michael Foods since November 2003 following the consummation of the transactions. Mr. Abbrecht is a Managing Director of Thomas H. Lee Partners, L.P., where he has been employed since 1992. Prior to Thomas H. Lee Partners, L.P., Mr. Abbrecht held a position in the mergers and acquisitions department of Credit Suisse First Boston. Mr. Abbrecht is a director of Affordable Residential Communities, Inc. and National Waterworks, Inc.

Anthony J. DiNovi has been a director of Michael Foods since November 2003 following the consummation of the transactions. Mr. DiNovi is a Managing Director of Thomas H. Lee Partners, L.P., where he has been employed since 1988. Prior to Thomas H. Lee Partners, L.P., Mr. DiNovi held various positions in the corporate finance departments of Goldman, Sachs & Co. and Wertheim Schroder & Co., Inc. Mr. DiNovi is a director of American Media, Inc., Endurance Specialty Holdings, Inc., Eye Care Centers of America, Inc., FairPoint Communications, Inc., Fisher Scientific International, Inc., National Waterworks, Inc., US LEC Corporation, Vertis, Inc. and various private corporations.

Jerome J. Jenko has been a director and a member of the management committee of M-Foods Investors since 2001 and a director of Michael Foods since 1998. Mr. Jenko had been a director and a member of the management committee of M-Foods Investor LLC, our predecessor’s parent prior to the 2003 acquisition. He has been a Senior Advisor with Goldsmith, Agio, Helms and Company, an investment banking firm, since 1997. Mr. Jenko is a director of Ocean Spray Cranberries, Inc.

Kent R. Weldon has been a director of Michael Foods since November 2003 following the consummation of the transactions. Mr. Weldon is a Managing Director of Thomas H. Lee Partners, L.P, where he has been employed since 1991. Prior to Thomas H. Lee Partners, L.P., Mr. Weldon held a position in the corporate finance department of Morgan Stanley & Co. Incorporated. Mr. Weldon is a director of FairPoint Communications, Inc. and Syratech Corporation.

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Executive Compensation

The following table sets forth information concerning the compensation of our chief executive officer and each of our four most highly compensated executive officers, referred to as the named executive officers, during each of the last three fiscal years.

Summary Compensation Table

	Annual Compensation					Long-Term Compensation
Name and Principal Position	Fiscal Year	Salary		Bonus(1)		Securities Underlying Options(2)	LTIP Payouts(3)		All Other Compensations(4)
Gregg A. Ostrander Chairman, President and Chief Executive Officer	2003 2002 2001	$	682,500 650,000 618,269	$	—   520,000 463,702	7,784 —   5,250	$	—   —   110,226	$	13,433 13,654 12,000
John D. Reedy Executive Vice President and Chief Financial Officer	2003 2002 2001		310,000 295,000 283,462		—   218,300 184,250	2,773 —   1,875		—   —   53,157		14,267 14,557 12,909
Bill L. Goucher President–Egg products division(5)	2003 2002 2001		309,885 295,000 283,462		—   218,300 184,250	—   —   1,875		—   —   49,153		14,267 12,192 10,706
James D. Clarkson Chief Operating Officer	2003 2002 2001		310,000 295,000 272,885		—   218,300 177,375	2,648 —   1,500		—   —   43,133		8,676 10,580 8,999
Bradley L. Cook Executive Vice President–Egg products division	2003 2002 2001		218,846 208,846 197,692		—   113,550 92,718	—   —   500		—   —   25,194		8,288 8,270 6,956

(1) Bonus amounts earned in 2003 are not calculable as of the date of this prospectus.

(2) M-Foods Holdings, Inc., the parent of our predecessor, issued options to all the named executive officers in 2001. Our predecessor’s parent and our current parent issued options to certain named executive officers in 2003.

(3) Reflects the cash value of shares awarded under our 1994 Executive Incentive Plan, as amended, which vested upon the 2001 acquisition affecting a change in control. These share awards had been provisionally earned in previous years, but were not vested prior to the 2001 acquisition. Upon the 2001 acquisition, the share awards were converted to cash based upon the 2001 acquisition price of $30.10 per share. Also, includes amounts received in 2003 for termination of the M-Foods Holdings, Inc. 2001 Stock Option Plan, as the options granted under the plan were converted to cash upon the completion of the 2003 acquisition.

(4) Reflects the value of contributions made under the retirement savings plan and the value of life insurance premiums paid by us.

(5) Mr. Goucher retired in January 2004.

Note: All the above amounts exclude any deferred compensation arrangements from our predecessor’s parent company.

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The following table sets forth information concerning individual grants of stock options (whether or not in tandem with SARs), and freestanding SARs (including options and SARs that subsequently have been transferred) made during the last completed fiscal year to each of the named executive officers:

Option/SAR Grants in Last Fiscal Year

Individual Grants							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
(a)	(b)	(c)		(d)		(e)	(f)	(g)
Name	Number of Securities Underlying Options/SARs Granted (#)	Percentage of Total Options/ SARs Granted to Employees in Fiscal Year		Exercise or Base Price ($/Sh)		Expiration Date	5% ($)	10% ($)
Gregg A. Ostrander	1,375 6,409	8.1 37.7	%	$	469.27 626.99	(1) 11-20-13	N/A      $2,527,137	N/A $6,404,257
John D. Reedy	500 2,273	2.9 13.4			469.27 626.99	(1) 11-20-13	N/A      896,267	N/A 2,271,318
Bill L. Goucher	—	—			—	—	—	—
James D. Clarkson	375 2,273	2.2 13.4			469.27 626.99	(1) 11-20-13	N/A      896,267	N/A 2,271,318
Bradley L. Cook	—	—			—	—	—	—

(1) Exercised upon the completion of the 2003 acquisition.

The following table sets forth information concerning each exercise of stock options (or tandem SARs), and freestanding SARs made during the last completed fiscal year by each of the named executive officers, and the fiscal year-end value of unexercised options and SARs:

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

(a)	(b)	(c)		(d)	(e)
Name	Shares Acquired on Exercise (#)	Value Realized (1)		Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable/Unexercisable	Value of Unexercised In-the- Money Options/SARs at FY-End ($) Exercisable/Unexercisable(2)
Gregg A. Ostrander	6,625	$	6,342,234	0/6,409	—
John D. Reedy	2,375		2,276,631	0/2,273	—
Bill L. Goucher	1,875		1,794,972	—	—
James D. Clarkson	1,875		1,794,971	0/2,273	—
Bradley L. Cook	500		478,659	—	—

(1) Reflects the value of options exercised upon the completion of the 2003 acquisition, based on the purchase price paid for the shares underlying such options pursuant to the terms of the 2003 acquisition.

(2) Fair market value of the underlying securities cannot be determined by us in the absence of a market therefor.

Compensation Committee Interlocks and Insider Participation

The compensation arrangements for our chief executive officer and each of our executive officers was established pursuant to the terms of the respective employment agreements between us and each executive officer. The terms of the employment agreements were established pursuant to arms-length negotiations between representatives of Thomas H. Lee Partners, L.P. or senior executives and each executive officer.

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Board of Directors Compensation

All members of our board of directors are reimbursed for their usual and customary expenses incurred in connection with attending all board and other committee meetings.

Deferred Compensation Plan

Upon the closing of the acquisition, certain managers participating in the investment described above became participants in the Holdings 2003 Deferred Compensation Plan. Each participant contributed certain proceeds to the Deferred Compensation Plan. The Deferred Compensation Plan is a nonqualified, unfunded obligation of Holdings. Each participant’s deferred compensation account under the plan will track certain distributions to be made to the Class A Units of MF Investors, however, the plan will not hold actual Class A Units of MF Investors. Participants in the plan will be entitled to a distribution from their deferred compensation account upon the earlier of (i) a change of control of Holdings (ii) the tenth anniversary of the date of the plan and (iii) upon the exercise of any put or call of the participants Class B Units of MF Investors. All payments made under the plan shall be made in cash by Holdings.

Incentive Plans

Each of the named executive officers is a participant in incentive plans providing for cash bonuses of up to 100% of base salary, subject to our achieving certain target goals in 2004 and based on our financial performance for that fiscal year.

Management Participation

Members of management made investments in M-Foods Holdings, our predecessor’s parent company, of $33.0 million of securities of MF Investors, our parent. When the transactions were consummated, these members of management contributed shares of M-Foods Holdings in exchange for Class A, Class B and Class C limited liability company units of MF Investors. Certain members of management also contributed certain proceeds related to deferred compensation accounts, bonuses related to the sale of the dairy products division and proceeds in respect of options that would otherwise be payable to them in connection with the transactions to a deferred compensation plan of Holdings.

Employment Agreements

General Provisions. The employment agreement with Gregg A. Ostrander provides for a term of two years beginning on the closing date of the transactions, subject to certain termination rights, and automatic one year extensions beginning with the second anniversary of the closing of the transactions. The Ostrander employment agreement provides that Mr. Ostrander will receive an annual base salary of at least $715,000 and that he will participate in certain bonus arrangements, long-term incentive plans and employee benefit plans of Michael Foods. Mr. Ostrander will be subject to a noncompetition covenant and a nonsolicitation provision.

The employment agreement with John D. Reedy provides for a term of two years beginning on the closing date of the transactions, subject to certain termination rights and automatic one year extensions beginning with the second anniversary of the closing of the transactions. The Reedy employment agreement provides that Mr. Reedy will receive an annual base salary of at least $400,000 and that he will participate in certain bonus arrangements, long-term incentive plans and employee benefit plans of Michael Foods. Mr. Reedy will be subject to a noncompetition covenant and a nonsolicitation provision.

The employment agreement with James D. Clarkson provides for a term of two years beginning on the closing date of the transactions, subject to certain termination rights and automatic one year extensions beginning with the second anniversary of the closing of the transactions. Mr. Clarkson’s annual base salary will be at least

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$400,000, and he will participate in certain bonus arrangements, long-term incentive plans and employee benefit plans of Michael Foods. Mr. Clarkson will be subject to a noncompetition covenant and a nonsolicitation provision.

The employment agreement with James Mohr provides for a term beginning with the close of the acquisition through the first anniversary of the closing of the transactions, subject to certain termination rights and automatic one year extensions beginning on the first anniversary of the closing of the transactions. Mr. Mohr’s annual base salary will be at least $189,000, and he will participate in certain bonus arrangements and employee benefit plans of Michael Foods. Mr. Mohr will be subject to a noncompetition covenant and a nonsolicitation provision.

The employment agreement with Max R. Hoffmann provides for a term beginning with the close of the acquisition through the first anniversary of the closing of the transactions, subject to certain termination rights and automatic one year extensions beginning on the first anniversary of the closing of the transactions. Mr. Hoffmann’s annual base salary will be at least $165,000, and he will participate in certain bonus arrangements and employee benefit plans of Michael Foods. Mr. Hoffmann will be subject to a noncompetition covenant and a nonsolicitation provision.

Termination Provisions. The Ostrander employment agreement provides that if Mr. Ostrander’s employment is terminated by his death or disability, Mr. Ostrander, or his estate or beneficiaries, will receive a payment equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year prorated for months of employment in that year, plus any eligible unpaid other benefits, plus three times the total of Mr. Ostrander’s current annual base salary and target bonus. In addition, Mr. Ostrander will receive for three years following the termination date, or until such earlier time as Mr. Ostrander becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

If Mr. Ostrander’s employment is terminated for cause or he terminates without good reason, as described below, Mr. Ostrander will receive his annual base salary through the date of termination and other benefits not yet paid under any plan, program, policy, contract or agreement with or practice of Michael Foods. “Good reason” includes, among other things, any diminution in position, authority, duties and responsibilities or any requirement to relocate or travel extensively. If Mr. Ostrander terminates his employment for good reason or if Michael Foods terminates his employment other than for cause, death or disability, Mr. Ostrander will receive a lump sum in an amount equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year prorated for months of employment in that year, plus any eligible unpaid other benefits, plus three times the total of Mr. Ostrander’s current annual base salary and target bonus. In addition, Mr. Ostrander will receive for three years following the termination date, or until such earlier time as Mr. Ostrander becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

Mr. Ostrander may, under certain circumstances, also be eligible to receive, subject to certain limitations, an additional payment of any excise tax imposed by Section 4999 of the Internal Revenue Code in connection with payments made in connection with the acquisition and any future transactions, as well as a gross up payment such that he will retain an amount equal to the excise taxes, after all income taxes, interest and penalties associated with all such payments.

The Reedy employment agreement provides that if Mr. Reedy’s employment is terminated by his death or disability, Mr. Reedy, or his estate or beneficiaries, will receive a payment equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year prorated for months of employment in that year, plus any eligible unpaid other benefits, plus two times the total of Mr. Reedy’s current annual base salary and target bonus. In addition, Mr. Reedy will receive for two years following the termination date, or until such earlier time as Mr. Reedy becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

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If Mr. Reedy’s employment is terminated for cause or he terminates without good reason, such term having a meaning substantially similar to the meaning given such term in the Ostrander employment agreement, Mr. Reedy will receive his annual base salary through the date of termination and other benefits not yet paid under any plan, program, policy, contract or agreement with or practice of Michael Foods. If Mr. Reedy terminates his employment for good reason or if Michael Foods terminates his employment other than for cause, death or disability, Mr. Reedy will receive a lump sum in an amount equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year prorated for months of employment in that year, plus any eligible unpaid other benefits, plus two times the total of Mr. Reedy’s current annual base salary and target bonus. In addition, Mr. Reedy will receive for two years following the termination date, or until such earlier time as Mr. Reedy becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

Mr. Reedy may, under certain circumstances, also be eligible to receive, subject to certain limitations, an additional payment of any excise tax imposed by Section 4999 of the Internal Revenue Code in connection with payments made in connection with the acquisition and any future transactions, as well as a gross up payment such that he will retain an amount equal to the excise taxes, after all income taxes, interest and penalties associated with all such payments.

The Clarkson employment agreement provides that if Mr. Clarkson is terminated by his death or disability, Mr. Clarkson, or his estate or beneficiaries, will receive a payment equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year pro rated for the months of employment in that year, plus any eligible unpaid other benefits, plus two times the total of an amount equal to Mr. Clarkson’s current annual base salary and target bonus.

If Mr. Clarkson’s employment is terminated for cause or he terminates without good reason, such term having a meaning substantially similar to the meaning given such term in the Ostrander employment agreement, Mr. Clarkson will receive his annual base salary through the date of termination and other benefits not yet paid under any plan, program, policy, contract or agreement with or practice of Michael Foods. If Mr. Clarkson terminates his employment for good reason or if Michael Foods terminates his employment other than for cause, death or disability, Mr. Clarkson will receive a lump sum in an amount equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year prorated for months of employment in that year, plus any eligible unpaid other benefits, plus two times the total of Mr. Clarkson’s current annual base salary and target bonus. In addition, Mr. Clarkson will receive for two years following the termination date, or until such earlier time as Mr. Clarkson becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

Mr. Clarkson may, under certain circumstances, also be eligible to receive, subject to certain limitations, an additional payment of any excise tax imposed by Section 4999 of the Internal Revenue Code, in connection with payments made in connection with the acquisition and any future transactions, as well as a gross up payment such that he will retain an amount equal to the excise taxes, after all income taxes, interest and penalties associated with all such payments.

The Mohr employment agreement provides that if Mr. Mohr is terminated by his death or disability, Mr. Mohr, or his estate or beneficiaries, will receive a payment equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year pro rated for the months of employment in that year, plus any eligible unpaid other benefits, plus an amount equal to Mr. Mohr’s current annual base salary. In addition, Mr. Mohr will receive for one year following the termination date, or until such earlier time as Mr. Mohr becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

If Mr. Mohr is terminated for cause or he terminates without good reason, as defined in the Mohr employment agreement, Mr. Mohr will receive his annual base salary through the date of termination and other

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benefits not yet paid under any plan, program, policy, contract or agreement with or practice of Michael Foods. If Mr. Mohr terminates his employment for good reason or if we terminate his employment other than for cause, death or disability, Mr. Mohr will receive a lump sum in an amount equal to any annual base salary through the date of termination not yet paid, plus the target bonus for the year prorated for months of employment in that year, plus any eligible unpaid other benefits, plus an amount equal to Mr. Mohr’s current annual base salary. In addition, Mr. Mohr will receive for one year following the termination date, or until such earlier time as Mr. Mohr becomes eligible to receive comparable benefits, certain medical, dental and life insurance benefits for himself and his family.

Mr. Mohr may, under certain circumstances, also be eligible to receive, subject to certain limitations, an additional payment of any excise tax imposed by Section 4999 of the Internal Revenue Code, in connection with payments made in connection with the acquisition and any future transactions, as well as a gross up payment such that he will retain an amount equal to the excise taxes, after all income taxes, interest and penalties associated with all such payments.

The Hoffmann employment agreement contains severance provisions substantially identical to the severance provisions contained in the Mohr employment agreement.

Mr. Hoffmann may, under certain circumstances, also be eligible to receive, subject to certain limitations, an additional payment of any excise tax imposed by Section 4999 of the Internal Revenue Code, in connection with payments made in connection with the acquisition and any future transactions, as well as a gross up payment such that he will retain an amount equal to the excise taxes, after all income taxes, interest and penalties associated with all such payments.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The issuer is a wholly owned subsidiary of Holdings, a corporation owned, in part, by MF Investors, whose members include affiliates of Thomas H. Lee Partners, L.P. and certain members of our senior management.

The following table sets forth certain information regarding beneficial ownership of MF Investors by: (i) each person or entity owning any class of MF Investors’ outstanding securities and (ii) each member of MF Investors’ management committee (which is identical to the board of directors of Michael Foods), each of our named executive officers and all members of the management committee and executive officers as a group. MF Investors’ outstanding securities consist of approximately 2,966,317.98 Class A Units, 263,682.02 Class B Units and 330,000 Class C Units. The Class A Units, Class B Units and Class C Units generally have identical rights and preferences, except that the Class C Units are non-voting and have different rights with respect to certain distributions described in “Certain Relationships and Related Transactions—Certain Agreements Relating to the Acquisition—Limited Liability Company Agreement of MF Investors.” To our knowledge, each of these securityholders has sole voting and investment power as to the units shown unless otherwise noted. Beneficial ownership of the securities listed in the table has been determined in accordance with the applicable rules and regulations promulgated under the Securities Exchange Act of 1934.

	Securities Beneficially Owned
Name and Address	Number of Class A Units	Number of Class B Units	Percentage of Class A and B Units		Number of Class C Units	Percentage of Class C Units
Principal Securityholders:
Thomas H. Lee Partners L.P. and affiliates (1)	2,900,000	—	89.8	%	—	—
Management Committee Members and Executive Officers:
Gregg A. Ostrander (2)	22,806.09	118,193.91	4.4	%	141,000	42.7	%
John D. Reedy (2)(3)	7,707.96	27,292.04	0.8	%	35,000	10.6	%
Anthony J. DiNovi (1)	—	—	—		—	—
Kent R. Weldon (1)	—	—	—		—	—
Todd M. Abbrecht (1)	—	—	—		—	—
James D. Clarkson (2)	16,206.50	33,793.50	1.5	%	50,000	15.2	%
Jerome J. Jenko (4)	—	—	—		—	—
Max R. Hoffmann (2)	6,863.43	10,136.57	0.5	%	17,000	5.2	%
James Mohr (2)	5,728.70	11,271.30	0.5	%	17,000	5.2	%
All management committee members and named executive officers as a group (9 persons)	59,312.68	200,687.32	8.0	%	260,000	78.8	%

(1) Includes interests owned by each of Thomas H. Lee Equity Fund V, L.P., Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Equity (Cayman) Fund V, L.P., Thomas H. Lee Investors Limited Partnership, 1997 Thomas H. Lee Nominee Trust, Putnam Investments Holdings, LLC, Putnam Investments Employees’ Securities Company I, LLC, and Putnam Investments Employees’ Securities Company II, LLC. Thomas H. Lee Equity Fund V, L.P. and Thomas H. Lee Parallel Fund V, L.P. are Delaware limited partnerships, whose general partner is THL Equity Advisors V, LLC, a Delaware limited liability company. Thomas H. Lee Equity (Cayman) Fund V, L.P. is an exempted limited partnership formed under the laws of the Cayman Islands, whose general partner is THL Equity Advisors V, LLC, a Delaware limited liability company registered in the Cayman Islands as a foreign company. Thomas H. Lee Advisors, LLC, a Delaware limited liability company, is the general partner of Thomas H. Lee Partners, L.P., a Delaware limited partnership, which is the sole member of THL Equity Advisors V, LLC. Thomas H. Lee Investors Limited Partnership (f/k/a THL-CCI Limited Partnership) is a Massachusetts limited partnership, whose

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general partner is THL Investment Management Corp., a Massachusetts corporation. The 1997 Thomas H. Lee Nominee Trust is a trust with US Bank, N.A. serving as Trustee. Thomas H. Lee, a managing director of Thomas H. Lee Advisors, LLC, has voting and investment control over common shares owned of record by the 1997 Thomas H. Lee Nominee Trust. Each of Anthony J. DiNovi, Kent R. Weldon and Todd M. Abbrecht are managing directors of Thomas H. Lee Advisors, LLC. Each of Mr. DiNovi, Mr. Weldon and Mr. Abbrecht may be deemed to beneficially own member units of MF Investors, LLC held of record by Thomas H. Lee Equity Fund V, L.P., Thomas H. Lee Parallel Fund V, L.P. and Thomas H. Lee Equity (Cayman) Fund V, L.P. Each of these individuals disclaims beneficial ownership of these units except to the extent of their pecuniary interest therein. The address of Thomas H. Lee Equity Fund V, L.P., Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Equity (Cayman) Fund V, L.P., Thomas H. Lee Investors Limited Partnership, the 1997 Thomas H. Lee Nominee Trust, Anthony J. DiNovi and Kent R. Weldon is 75 State Street, Boston, MA 02109. Putnam Investments Holdings LLC, Putnam Investments Employees’ Securities Company I, LLC and Putnam Investments Employees’ Securities Company II, LLC are co-investment entities of Thomas H. Lee Partners and each disclaims beneficial ownership of any securities other than the securities held directly by such entity. The address for the Putnam entities is One Post Office Square, Boston, MA 02109.

(2) The address for Messrs. Ostrander, Reedy, Clarkson, Hoffmann and Mohr is c/o Michael Foods, Inc., 301 Carlson Parkway, Suite 400, Minnetonka, MN 55305.

(3) In December 2003, Mr. Reedy gifted 15,000 Class B Units and 15,000 Class C Units to his adult children. Mr. Reedy disclaims beneficial ownership of these units.

(4) The address for Mr. Jenko is c/o Goldsmith, Agio, Helms and Company, First Bank Place, Suite 4600, 601 Second Avenue South, Minneapolis, MN 55402.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Agreements Relating to the Acquisition

The Merger Agreement. On October 10, 2003, Holdings and its wholly owned subsidiary, THL Food Products Co., entered into an agreement and plan of merger with M-Foods Investors, LLC, as stockholder representative, M-Foods Holdings, the sole stockholder of our predecessor and its stockholders, pursuant to which THL Food Products Co. merged with and into M-Foods Holdings, with M-Foods Holdings being the surviving entity. Holdings is a corporation which is owned by MF Investors, LLC, whose members include affiliates of Thomas H. Lee Partners, L.P. and members of our senior management.

In connection with the merger, each share of common stock of M-Foods Holdings was converted into the right to receive cash equal to the quotient determined by dividing approximately $1.055 billion (subject to certain adjustments), by the fully diluted number of shares (including options) of M-Foods Holdings outstanding at the effective time of the merger. Each option to purchase common stock was cancelled and converted into the right to receive an amount equal to the amount paid to each share of common stock less the applicable exercise price payable upon the exercise of such option.

Shares of preferred stock of M-Foods Holdings were generally converted into the right to receive cash equal to the unpaid liquidation value and the dividend value of these shares at the effective time of the merger.

None of the representations and warranties set forth in the agreement and plan of merger survived the closing. The stockholders party to the agreement and plan of merger agreed to indemnify Holdings and M-Foods Holdings (as the surviving corporation) for any loss relating to a breach of certain representations and warranties relating to title to securities and authority to enter into the transaction set forth in the securities purchase agreement governing the sale of the dairy products division.

Immediately after the merger of THL Food Products Co. with and into M-Foods Holdings, Michael Foods merged with and into M-Foods Holdings, with M-Foods Holdings as the surviving corporation, and M-Foods Holdings was renamed “Michael Foods, Inc,” a Delaware corporation.

Limited Liability Company Agreement of MF Investors. The limited liability company agreement of MF Investors authorizes MF Investors to issue Class A Units, Class B Units and Class C Units. The Class A Units, Class B Units and Class C Units generally have identical rights and preferences, except that the Class C Units are nonvoting and have different rights as to certain distributions described below. MF Investors also have the authority to create and issue preferred units, with the terms and provisions more fully described in the management unit subscription agreements, in connection with certain repurchases by MF Investors of Class B Units and Class C Units held by former executives of Michael Foods and its subsidiaries.

Distributions of property of MF Investors will be made in the following order:

• first, holders of Class A Units, Class B Units and Class C Units will receive a return of their invested capital;

• second, the holders of the Class A Units and Class B Units will receive an 8% cumulative preferred return on their invested capital; and

• thereafter, holders of the Class A Units and Class B Units, on the one hand, and the holders of the Class C Units, on the other, will receive certain percentages of all remaining distributions, based on satisfaction of certain minimum internal rate of return or multiple of investment hurdles.

A management committee has the exclusive authority to manage and control the business and affairs of MF Investors. The management committee’s composition is determined in accordance with the provisions of the securityholders agreement described below.

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Securityholders Agreement. Pursuant to the securityholders agreement entered into in connection with the acquisition, units of MF Investors (or common stock following change in corporate form) beneficially owned by the Michael Foods executives and any other employees of MF Investors and its subsidiaries, which we collectively refer to as the management investors, are subject to certain restrictions on transfer, other than certain exempt transfers as defined in the securityholders agreement, as well as the other provisions described below. When reference is made to “units” of MF Investors in the discussion that follows, that reference is deemed to include common stock of MF Investors following a change in corporate form, whether in preparation for an initial public offering or otherwise.

The securityholders agreement provides that Thomas H. Lee Partners, L.P., the management investors and all other parties to the agreement will vote all of their units to elect and continue in office management committees or boards of directors of MF Investors and each of its subsidiaries, other than subsidiaries of Michael Foods, consisting of up to five members or directors composed of:

• one person designated by Thomas H. Lee Equity Fund V, L.P.;

• one person designated by Thomas H. Lee Parallel Fund V, L.P.;

• one person designated by Thomas H. Lee Cayman Fund V, L.P.;

• the chief executive officer of MF Investors; and

• one person designated by the chief executive officer of MF Investors.

The securityholders agreement also provides:

• the management investors with customary “tag-along” rights with respect to transfers of MF Investors units beneficially owned by Thomas H. Lee Partners, L.P., its partners or their transferees;

• Thomas H. Lee Partners, L.P. with “drag-along” rights with respect to MF Investors units owned by the management investors in a sale of MF Investors; and

• Thomas H. Lee Partners, L.P. with registration rights to require MF Investors to register units held by them under the Securities Act.

If MF Investors issues or sells any new units to Thomas H. Lee Partners, L.P., subject to certain exceptions, each management investor shall have the right to subscribe for a sufficient number of new MF Investors units to maintain its respective ownership percentage in MF Investors.

Management Unit Subscription Agreements. Under the management unit subscription agreements, management, immediately prior to the acquisition, contributed to MF Investors shares of M-Foods Holdings common stock for Class A Units, Class B Units and Class C Units of MF Investors based on a $100 per Class A Unit price and a $2.00 per Class B and Class C Unit price. Following the acquisition, the executives held approximately 10% of the outstanding Class A and Class B units combined, and 100% of the outstanding Class C units.

Under certain circumstances MF Investors may be required to purchase all of an executive’s units. In addition, in certain circumstances, MF Investors has the right to purchase all or a portion of an executive’s units, if an executive’s employment is terminated or that executive is deemed to be engaging in certain competitive activities. However, if MF Investors elects or is required to purchase any units pursuant to the call and put options described in the preceding sentences, and that payment would result in a violation of law applicable to MF Investors or a default under certain of its financing arrangements, Investors may make the portion of the cash payment so affected by the delivery of preferred units of MF Investors with a liquidation preference equal to the amount of the cash payment affected.

In addition, each management stock purchase and unit subscription agreement contains customary representations, warranties and covenants made by the respective executive or party thereto.

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Management Agreement. Pursuant to the management agreement entered into in connection with the transactions, THL Managers V, LLC, an affiliate of Thomas H. Lee Partners, L.P., renders to Michael Foods and each of its subsidiaries, certain advisory and consulting services. In consideration of those services, we will pay to THL Managers V, LLC semi-annually, an aggregate per annum management fee equal to the greater of:

• $1,500,000; and

• an amount equal to 1.0% of our consolidated earnings before interest, taxes, depreciation and amortization for that fiscal year, but before deduction of any such fee.

We also paid to THL Managers V, LLC at the closing of the transactions a transaction fee equal to $15,000,000 plus all out of pocket expenses incurred by Thomas H. Lee Partners, L.P. prior to the closing of the transaction for services rendered by them in connection with the transactions.

We also agreed to indemnify THL Managers V, LLC and its affiliates from and against all losses, claims, damages and liabilities arising out of or related to the performance by THL Managers V, LLC of the services pursuant to the management agreement.

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DESCRIPTION OF CREDIT FACILITIES

In connection with the transactions, we entered into:

• a senior credit facility with Bank of America, N.A., as administrative agent, and various other lenders; and

• a senior unsecured term loan facility with Bank of America, N.A., as administrative agent and various other lenders.

Set forth below is a summary of the terms of the senior credit facility and the senior unsecured term loan facility.

We borrowed amounts under the senior credit facility and the senior unsecured term loan facility to provide a portion of the proceeds required to consummate the transactions, pay fees and expenses incurred in connection with the transactions and to provide for working capital and other general corporate purposes, including other permitted acquisitions.

Senior Credit Facility

The senior credit facility provides for aggregate borrowings by us of up to $595.0 million. The senior credit facility provides for:

• a revolving credit facility of up to $100.0 million in revolving credit loans, including a letter of credit sub-limit; and

• a term loan facility of $495.0 million.

In addition, in the absence of a default, we may request, on up to three different occasions, an increase in the commitments under the senior credit facility of up to $100.0 million, of which up to $50.0 million may be provided in revolving credit commitments. If our then existing lenders decline our request or do not respond within a specified time period, we may invite certain eligible persons, approved by the administrative agent, to provide us with the requested increase in commitments and become lenders under the senior credit facility.

All revolving loans incurred under the senior credit facility will mature in 2009. The term loan facility will mature in 2010.

The following is a summary of the material terms of the senior credit facility.

The senior credit facility is secured by, among other things:

• a first priority security interest in substantially all of our assets, including all of our receivables, contracts, contract rights, equipment, intellectual property, inventory and all other tangible and intangible assets, and the assets of each of our direct and indirect domestic subsidiaries, subject to certain customary exceptions; and

• a pledge of (i) all of our capital stock and that of any of our direct and indirect domestic subsidiaries and (ii) 65% of the capital stock of first-tier foreign subsidiaries.

In addition, the senior credit facility is guaranteed by Holdings and each of the issuer’s existing and future direct and indirect domestic subsidiaries. Borrowings under the senior credit facility bear interest at a floating rate, which can be either a LIBOR rate plus an applicable margin or, at our option, a base rate (defined as the higher of (x) the Bank of America prime rate and (y) the federal funds effective rate, plus one half percent (.50%) per annum) plus an applicable margin. The initial applicable margin for LIBOR loans and base rate loans under the revolving credit facility is 2.50% and 1.50% per annum, respectively. Commencing after delivery of a compliance certificate in respect of the March 31, 2004, fiscal quarter, the applicable margin under the revolving

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credit facility will be subject to adjustment based on a performance pricing grid based upon the leverage ratio. The initial applicable margin for LIBOR loans and base rate loans under the term loan facility is 2.50% and 1.50% per annum, respectively. Commencing after delivery of a compliance certificate in respect of the fiscal quarter ending March 31, 2004, the applicable margin under the term loan facility will be subject to adjustment in accordance with a performance pricing grid based on the leverage ratio. The interest rate payable under the senior credit facility will increase by 2.00% per annum during the continuance of any payment or bankruptcy event of default.

For LIBOR loans, we may select interest periods of one, two, three or six months and, to the extent available to all lenders, nine or twelve months. Interest will be payable at the end of the selected interest period, but no less frequently than every three months within the selected interest period.

Under the senior credit facility we are also required to pay a commitment fee equal to 0.50% per annum times the actual daily amount by which the committed amounts exceed amounts actually borrowed under the revolving credit facility. Such commitment fee is payable quarterly in arrears.

Prior to the maturity date, funds borrowed under the revolving credit facility may be borrowed, repaid and reborrowed, without premium or penalty. The term loan facility will be subject to amortization in equal quarterly installments of principal as set forth in the table below.

Year	Term Loan Facility
1	$	4.95 million
2	$	4.95 million
3	$	4.95 million
4	$	4.95 million
5	$	4.95 million
6	$	4.95 million
7	$	465.30 million

Voluntary prepayments of principal amounts outstanding under the senior credit facility will be permitted at any time. However, if a prepayment of principal is made with respect to a LIBOR loan on a date other than the last day of the applicable interest period, we will be required to compensate the lenders for losses and expenses incurred as a result of the prepayment.

In addition, we will be required to prepay amounts outstanding under the senior credit facility in an amount equal to:

• 100% of insurance proceeds and net cash proceeds from certain asset dispositions by Holdings, us or our subsidiaries, subject to certain exceptions and reinvestment provisions;

• 100% of the net cash proceeds from the issuance of any additional debt by Holdings, us or our subsidiaries (excluding certain permitted debt);

• 50% (which percentage will be reduced upon the achievement of specified performance targets) of the net cash proceeds from the issuance of equity by Holdings in a public offering or in a private placement underwritten, placed or initially purchased by an investment bank, excluding proceeds of equity issuances or sales to certain investors and other customary exceptions; and

• 50% (which percentage will be reduced upon the achievement of specified performance targets) of excess cash flow, as defined in the senior credit facility.

The senior credit facility requires us to meet a minimum interest coverage ratio and a maximum leverage ratio. In addition, the senior credit facility contains certain restrictive covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements.

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The senior credit facility contains customary events of default, including without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, judgment defaults in excess of specified amounts, failure of any guaranty or security document supporting the senior credit facility to be in full force and effect, and a change of control.

Senior Unsecured Term Loan Facility

The senior unsecured term loan facility provides for aggregate borrowings by us of $135.0 million in term loans maturing in 2011.

The senior unsecured term loan facility is not secured by any of our or our subsidiaries’ assets. The senior unsecured term loan facility is guaranteed on an unsecured basis by Holdings and each of Michael Foods’ existing and future direct and indirect domestic subsidiaries.

Borrowings under the senior unsecured term loan facility bear interest at a floating rate which can be either a LIBOR rate plus 3.75% per annum or, at our option, a base rate (defined as the higher of (x) the Bank of America prime rate and (y) the federal funds effective rate, plus one half percent (.50%) per annum) plus 2.75% per annum. The interest rate payable under the senior unsecured term loan facility will increase by 2.00% per annum during the continuance of any payment or bankruptcy event of default.

We may select interest periods of one, two, three or six months and, to the extent available to all lenders, nine or twelve months for LIBOR rate advances. Interest will be payable at the end of the selected interest period, but no less frequently than every three months within the selected interest period.

The loans made under the senior unsecured term loan facility were available in a single borrowing on the closing date and will be payable in full at maturity.

We may prepay the senior unsecured term loan facility at any time. However, any voluntary prepayment within one year from the closing date will require a prepayment premium of 3.00%, any prepayment within two years from the closing date, but subsequent to the first anniversary of the closing date, will require a prepayment premium of 2.00% and any prepayment within three years from the closing date, but subsequent to the second anniversary of the closing date, will require a prepayment premium of 1.00%. In addition, if a prepayment of principal is made with respect to a LIBOR loan on a date other than the last day of the applicable interest period, we will be required to compensate the lenders for losses and expenses incurred as a result of the prepayment.

Within 365 days after the receipt of any net proceeds from an asset sale we may apply these net proceeds at our option:

• to repay senior secured debt and, if the senior secured debt repaid is revolving credit indebtedness, to correspondingly reduce commitments with respect thereto;

• to acquire all or substantially all of the assets of, or a majority of the voting equity interests of, another person engaged in a permitted business;

• to acquire other assets or to make capital expenditures, that, in either case, are used or useful in a permitted business; or

• any combination of the foregoing.

Any net proceeds from asset sales that are not applied or invested as provided above will constitute “excess proceeds.” If as a result of an asset sale there will be any excess proceeds, we will be required to prepay the senior unsecured term loan facility without premium or penalty from and after the third anniversary of the closing date. Any such mandatory prepayment within one year from the closing date will require a prepayment

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premium of 3.00%, any prepayment within two years from the closing date, but subsequent to the first anniversary of the closing date, will require a prepayment premium of 2.00% and any prepayment within three years from the closing date, but subsequent to the second anniversary of the closing date, will require a prepayment premium of 1.00%. In addition, upon the occurrence of a change in control, we must prepay the senior unsecured term loan facility at 101% of the outstanding principal amount, plus accrued and unpaid interest, if any, to the date of prepayment.

The senior unsecured term loan facility limits our ability to make restricted payments and the amounts of restricted payments we may make. In addition, the senior unsecured term loan facility contains certain restrictive covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances, changes in nature of business and other matters customarily restricted in such agreements.

The senior unsecured term loan facility contains events of default that are substantially the same as in the senior credit facility.

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DESCRIPTION OF NOTES

The following description is a summary of the material provisions of the Indenture and the Registration Rights Agreement. It does not restate those agreements in their entirety. We urge you to read the Indenture and the Registration Rights Agreement because they, and not this description, define your rights as holders of the Notes. We have filed copies of the Indenture and the Registration Rights Agreement as exhibits to the registration statement. You may also request copies of these agreements at our address set forth under the heading “Available Information.”

You can find the definitions of certain terms used in this description under the subheading “Certain Definitions.” Certain defined terms used in this description but not defined below under “Certain Definitions” have the meanings assigned to them in the Indenture. In this description, the word “issuer” refers only to the Surviving Corporation, and not to any of the subsidiaries of the Surviving Corporation.

The Issuer issued the old notes and will issue the registered notes under an Indenture, dated November 20, 2003 (as supplemented, the “Indenture”), among itself, the Guarantors party thereto and Wells Fargo Bank Minnesota, National Association, as trustee (the “Trustee”), in a private transaction that is not subject to the registration requirements of the Securities Act. The old notes and the registered notes will be identical in all material respects, except that the registered notes have been registered under the Securities Act. Accordingly, unless specifically stated to the contrary, the following description applies equally to the old notes and the registered notes. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

Brief Description of the Notes and the Note Guarantees

The Notes

The Notes are:

• unsecured, senior subordinated obligations of the issuer;

• subordinated in right of payment to all existing and future Senior Debt of the issuer;

• pari passu in right of payment with any future senior subordinated Indebtedness of the issuer; and

• guaranteed by the Guarantors.

Assuming the transactions, including the offering of the old notes, were completed on September 30, 2003, the Notes would have been subordinated to approximately $639.8 million of the issuer’s Senior Debt, of which $630.0 million would have consisted of borrowings under our senior credit facility and our senior unsecured term loan facility.

The Note Guarantees

The Notes will be guaranteed by all of the current and future Domestic Subsidiaries of the issuer, other than a Receivables Subsidiary or an Immaterial Subsidiary. See “—Additional Note Guarantees.” As of the date of the Indenture, all of the issuer’s subsidiaries, other than MFI Food Canada, Inc., will be “Domestic Subsidiaries” and Guarantors. In the future, the issuer may have additional subsidiaries that are not “Domestic Subsidiaries.”

Each Note Guarantee is:

• an unsecured, senior subordinated obligation of the Guarantor;

• subordinated in right of payment to all existing and future Senior Debt of the Guarantor; and

• pari passu in right of payment with any future senior subordinated Indebtedness of the Guarantor.

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Assuming the transactions including the offering of the old notes were completed on September 30, 2003, the Note Guarantees would have been subordinated to approximately $646.2 million of Senior Debt of the Guarantors, $630.0 million of which would have consisted of guarantees of borrowings under our senior credit facility and our senior unsecured term loan facility. As indicated above and as discussed in detail below under the subheading “—Subordination,” payments on the Notes and under the Note Guarantees will be subordinated to the prior payment in full in cash or Cash Equivalents of all Senior Debt. The Indenture permits the issuer and the Guarantors to incur additional Senior Debt.

As of the date of the Indenture, all of the issuer’s subsidiaries were “Restricted Subsidiaries.” However, under the circumstances described below under the subheading “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” the issuer will be permitted to designate certain of its subsidiaries as “Unrestricted Subsidiaries.” The issuer’s Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the Indenture. The issuer’s Unrestricted Subsidiaries will not guarantee the Notes.

Principal, Maturity and Interest

The Indenture provides for the issuance by the issuer of Notes with an unlimited principal amount, of which $150.0 million were issued on November 20, 2003. The issuer may issue additional notes (the “Additional Notes”) from time to time after the offering of the old notes. Any offering of Additional Notes is subject to the covenant described below under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.” The Notes and any Additional Notes subsequently issued under the Indenture would be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The issuer will issue Notes in denominations of $1,000 and integral multiples of $1,000. The Notes will mature on November 15, 2013.

Interest on the Notes will accrue at the rate of 8% per annum and will be payable semi-annually in arrears on May 15 and November 15, commencing on May 15, 2004. The issuer will make each interest payment to the Holders of record on the immediately preceding May 1 and November 1.

Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Methods of Receiving Payments on the Notes

If a Holder has given wire transfer instructions to the issuer, the issuer will pay all principal, interest and premium and Liquidated Damages, if any, on that Holder’s Notes in accordance with those instructions. All other payments on Notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the issuer elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.

Paying Agent and Registrar for the Notes

The Trustee is currently the Paying Agent and Registrar. The issuer may change the Paying Agent or Registrar without prior notice to the Holders, and the issuer or any of its Subsidiaries may act as Paying Agent or Registrar.

Transfer and Exchange

A Holder may transfer or exchange registered Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The issuer is not required to transfer or exchange any Note selected for redemption.

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Also, the issuer is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

The registered Holder of a Note will be treated as the owner of it for all purposes.

Note Guarantees

The Guarantors will jointly and severally guarantee the issuer’s obligations under the Notes. Each Note Guarantee will be subordinated to the prior payment in full of all Senior Debt of that Guarantor. The obligations of each Guarantor under its Note Guarantee will be limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. See “Risk Factors—Risks Relating to the Notes—Federal and state statutes allow courts, under specific circumstances, to void the notes or the guarantees and require noteholders to return payments received from the issuer or the subsidiary guarantors.”

The Indenture provides that a Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not that Guarantor is the surviving Person), another Person, other than the issuer or another Guarantor, unless:

(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and

(2) either:

(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger is a corporation, partnership or limited liability company, organized or existing under (i) the laws of the United States, any state thereof or the District of Columbia or (ii) the laws of the same jurisdiction as that Guarantor and, in each case, assumes all the obligations of that Guarantor under the Indenture, its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or

(b) such sale or other disposition complies with the “Asset Sale” provisions of the Indenture, including the application of the Net Proceeds therefrom.

The Note Guarantee of a Guarantor will be released:

(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the issuer, if the sale or other disposition of all or substantially all of the assets of that Guarantor complies with the “Asset Sale” provisions of the Indenture, including the application of the Net Proceeds therefrom;

(2) in connection with any sale of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the issuer, if the sale of all such Capital Stock of that Guarantor complies with the “Asset Sale” provisions of the Indenture, including the application of the Net Proceeds therefrom;

(3) if the issuer properly designates any Restricted Subsidiary that is a Guarantor (other than the Egg Products Division) as an Unrestricted Subsidiary; or

(4) in connection with any sale of Capital Stock of a Guarantor (other than the Egg Products Division) to a Person that results in the Guarantor no longer being a Subsidiary of the issuer, if the sale of such Capital Stock of that Guarantor complies with the “Asset Sale” provisions of the Indenture, including the application of the Net Proceeds therefrom.

Subordination

The payment of principal, interest and premium and Liquidated Damages, if any, on the Notes will be subordinated to the prior payment in full in cash or Cash Equivalents of all Senior Debt of the issuer, including Senior Debt of the issuer incurred after the date of the Indenture.

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The holders of Senior Debt of the issuer will be entitled to receive payment in full in cash or Cash Equivalents of all Obligations due in respect of Senior Debt of the issuer (including interest after the commencement of any bankruptcy proceeding at the rate specified in the documentation for the applicable Senior Debt of the issuer) before the Holders of Notes will be entitled to receive any payment with respect to the Notes (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under “—Legal Defeasance and Covenant Defeasance”), in the event of any distribution to creditors of the issuer:

(1) in a liquidation or dissolution of the issuer;

(2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the issuer or its property;

(3) in an assignment for the benefit of creditors; or

(4) in any marshaling of the issuer’s assets and liabilities.

The issuer also may not make any payment in respect of the Notes (except in Permitted Junior Securities or from the trust described under “—Legal Defeasance and Covenant Defeasance”) if:

(1) a payment default on Designated Senior Debt of the issuer occurs and is continuing beyond any applicable grace period; or

(2) any other default occurs and is continuing on any series of Designated Senior Debt of the issuer that permits holders of that series of Designated Senior Debt of the issuer to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from a representative of the holders of any Designated Senior Debt of the issuer.

Payments on the Notes may and shall be resumed:

(1) in the case of a payment default on Designated Senior Debt of the issuer, upon the date on which such default is cured or waived; and

(2) in case of any default referred to in clause (2) of the immediately preceding paragraph on Designated Senior Debt of the issuer, the earlier of (x) the date on which such default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received or (z) the date the Trustee receives notice from the representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of such Designated Senior Debt of the issuer has been accelerated.

No new Payment Blockage Notice may be delivered unless and until:

(1) 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and

(2) all scheduled payments of principal, interest and premium and Liquidated Damages, if any, on the Notes that have come due have been paid in full in cash.

No default referred to in clause (2) of the third immediately preceding paragraph that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default has been cured or waived for a period of not less than 90 days.

If the Trustee or any Holder of the Notes receives a payment in respect of the Notes (except in Permitted Junior Securities or from the trust described under “—Legal Defeasance and Covenant Defeasance”) when:

(1) the payment is prohibited by these subordination provisions; and

(2) the Trustee or the Holder has actual knowledge that the payment is prohibited; provided that such actual knowledge will not be required in the case of any payment default on Designated Senior Debt of the Issuer;

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the Trustee or the Holder, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt of the issuer. Upon the proper written request of the holders of Senior Debt of the issuer or if there is any payment default on any Designated Senior Debt, the Trustee or the Holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt of the issuer or their proper representative.

The issuer and the Trustee must promptly notify holders of its Senior Debt if payment of the Notes is accelerated because of an Event of Default.

As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the issuer, Holders of Notes may recover less ratably than creditors of the issuer who are holders of Senior Debt of the issuer.

Payments under the Note Guarantee of each Guarantor will be subordinated to the prior payment in full of all Senior Debt of such Guarantor, including Senior Debt of such Guarantor incurred after the date of the Indenture, on the same basis as provided above with respect to the subordination of payments on the Notes by the issuer to the prior payment in full of Senior Debt of the issuer. See “Risk Factors—Risks Relating to the Notes—Your right to receive payments on these notes is junior to the issuer’s existing senior indebtedness and possibly all of its future borrowings. Further, the guarantees of these notes are junior to all of the guarantors’ existing senior indebtedness and possibly to all their future borrowings.”

“Designated Senior Debt” means:

(1) any Indebtedness outstanding under the Credit Agreement; and

(2) any other Senior Debt permitted under the Indenture the principal amount of which is $25.0 million or more and that has been designated by the issuer as “Designated Senior Debt.”

“Permitted Junior Securities” means:

(1) Equity Interests in the issuer or the Parent; or

(2) debt securities that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt at least to the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt under the Indenture.

“Senior Debt” means:

(1) all Indebtedness of the issuer or any Guarantor outstanding under the Credit Agreement and the Senior Unsecured Term Loan Agreement and all Hedging Obligations with respect thereto, whether outstanding on the date of the Indenture or incurred thereafter;

(2) any other Indebtedness of the issuer or any Guarantor permitted to be incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes or any Note Guarantee; and

(3) all Obligations with respect to the items listed in the preceding clauses (1) and (2) (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law).

Notwithstanding anything to the contrary in the preceding, Senior Debt will not include:

(1) any liability for federal, state, local or other taxes owed or owing by the issuer;

(2) any Indebtedness of the issuer to any of its Subsidiaries or other Affiliates;

(3) any trade payables; or

(4) the portion of any Indebtedness that is incurred in violation of the Indenture.

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In the case of Indebtedness incurred under clause (1)(b) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” an Officers’ Certificate of the issuer as to the amount of the Borrowing Base shall be conclusive absent manifest error for purposes of clause (4) above.

Optional Redemption

At any time prior to November 15, 2006, the issuer may on any one or more occasions redeem up to 40% of the aggregate principal amount of Notes issued under the Indenture at a redemption price of 108% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings of the issuer (or of the Parent to the extent such proceeds are contributed to the common equity of the issuer); provided that:

(1) at least 60% of the aggregate principal amount of Notes initially issued under the Indenture remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the issuer and its Subsidiaries); and

(2) the redemption must occur within 90 days of the date of the closing of such Equity Offering.

Except pursuant to the preceding paragraph, the Notes will not be redeemable at the issuer’s option prior to November 15, 2008. The issuer is not prohibited, however, from acquiring the Notes by means other than a redemption, whether pursuant to an issuer tender offer, open market transactions or otherwise, assuming such acquisition does not otherwise violate the terms of the Indenture.

On or after November 15, 2008, the issuer may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated below:

Year	Percentage
2008	104.000	%
2009	102.667	%
2010	101.334	%
2011 and thereafter	100.000	%

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, each Holder of Notes will have the right to require the issuer to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder’s Notes pursuant to a Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the issuer will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the date of purchase. Within 30 days following any Change of Control, the issuer will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. The issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such conflict.

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On the Change of Control Payment Date, the issuer will, to the extent lawful:

(1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the issuer.

The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof.

Prior to complying with any of the provisions of this “Change of Control” covenant, but in any event within 90 days following a Change of Control, the issuer will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this covenant. The issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The Credit Agreement and the Senior Unsecured Term Loan Agreement prohibit the issuer from purchasing any Notes, and also provide that certain change of control events with respect to the issuer would constitute a default under those agreements. Any future credit agreements or other agreements relating to Senior Debt to which the issuer becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the issuer is prohibited from purchasing Notes, the issuer could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the issuer does not obtain such a consent or repay such borrowings, the issuer will remain prohibited from purchasing Notes. In such case, the issuer’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

The provisions described above that require the issuer to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the issuer repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

The issuer will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the issuer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. A Change in Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer. Notes repurchased pursuant to a Change of Control Offer will be retired and cancelled.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the issuer and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the issuer to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the issuer and its Subsidiaries taken as a whole to another Person or group may be uncertain.

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Asset Sales

The issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the issuer (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

(2) such fair market value is determined by the issuer’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

(3) at least 75% of the consideration therefor received by the issuer or such Restricted Subsidiary is in the form of cash, Cash Equivalents or Replacement Assets or a combination thereof. For purposes of this provision, each of the following shall be deemed to be cash:

(a) any liabilities (as shown on the issuer’s or such Restricted Subsidiary’s most recent balance sheet) of the issuer or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets and, in the case of liabilities other than Non-Recourse Debt, where the issuer and all Restricted Subsidiaries are released from any further liability in connection therewith; and

(b) any securities, notes or other obligations received by the issuer or any such Restricted Subsidiary from such transferee that are converted by the issuer or such Restricted Subsidiary into cash within 180 days thereafter (to the extent of the cash received in that conversion).

For purposes of paragraph (3) above, any liabilities of the issuer or any Restricted Subsidiary that are not assumed by the transferee of such assets in respect of which the issuer and all Restricted Subsidiaries are not released from any future liabilities in connection therewith shall not be considered consideration.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the issuer may apply such Net Proceeds at its option:

(1) to repay Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;

(2) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business;

(3) to acquire other assets, including investments in property, or to make capital expenditures, that, in either case, are used or useful in a Permitted Business; or

(4) any combination of the foregoing.

Pending the final application of any such Net Proceeds, the issuer may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $15.0 million, the issuer will make an Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the issuer may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such

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Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other pari passu Indebtedness to be purchased shall be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

The issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the Indenture, the issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such conflict.

The Credit Agreement and the Senior Unsecured Term Loan Agreement prohibit the issuer from purchasing any Notes. Any future credit agreements or other agreements relating to Senior Debt to which the issuer becomes a party may contain similar restrictions and provisions. In the event an Asset Sale occurs at a time when the issuer is prohibited from purchasing Notes, the issuer could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the issuer does not obtain such a consent or repay such borrowings, the issuer will remain prohibited from purchasing Notes. In such case, the issuer’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

Selection and Notice

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption as follows:

(1) if the Notes are listed, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or

(2) if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate.

No Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture. Notices of redemption may not be conditional.

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

Certain Covenants

Restricted Payments

The issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the issuer’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the issuer or any of its Restricted Subsidiaries), other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the issuer or to the issuer or a Restricted Subsidiary of the issuer;

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(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the issuer) any Equity Interests of the issuer or the Parent;

(3) make any payment of principal or premium on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated to the Notes or the Note Guarantees, except a payment of principal at the Stated Maturity thereof; or

(4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and

(2) the issuer would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the issuer and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (2), (3), (6), (7), (8), (10) and (11) of the next succeeding paragraph), is less than the sum, without duplication, of:

(a) 50% of the Consolidated Net Income of the issuer for the period (taken as one accounting period) beginning on the date of the Indenture and ending on the date of the issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(b) 100% of the aggregate net proceeds (including the fair market value of property) received by the issuer subsequent to the date of the Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the issuer (other than Excluded Contributions or net proceeds from the issue and sale of Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the issuer that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the issuer); plus

(c) an amount equal to the net reduction in Investments by the issuer and its Restricted Subsidiaries, subsequent to the date of the Indenture, resulting from payments of interest on Indebtedness, dividends, repayments of loans or advances or other transfers of assets, in each case to the issuer or any such Restricted Subsidiary from any such Investment, or from the net cash proceeds from the sale of any such Investment, or from a redesignation of an Unrestricted Subsidiary to a Restricted Subsidiary, but only if and to the extent such amounts are not included in the calculation of Consolidated Net Income and not to exceed in the case of any Investment the amount of the Investment previously made by the issuer or any Restricted Subsidiary in such Person or Unrestricted Subsidiary; provided that any amounts in excess of the amount of the Investment previously made may be added to the amounts otherwise available under this clause (c) to make Restricted Investments pursuant to this clause (3).

The preceding provisions will not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;

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(2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the issuer or any Restricted Subsidiary or of any Equity Interests of the issuer or any Parent in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the issuer) of, Equity Interests of the issuer other than Disqualified Stock; provided that the amount of any such net proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph;

(3) the repayment, defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the issuer or any Restricted Subsidiary with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

(4) the payment of any dividend by a Restricted Subsidiary of the issuer to the holders of any series or class of its common Equity Interests on a pro rata basis;

(5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the issuer and any distribution, loan or advance to the Parent for the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Parent, in each case held by any former or current employees, officers, directors or consultants of the issuer or any of its Restricted Subsidiaries or their respective estates, spouses, former spouses or family members under any management equity plan or stock option or other management or employee benefit plan upon the death, disability or termination of employment of such Persons, in an amount not to exceed $3.0 million in any calendar year; provided that the issuer may carry over and make in subsequent calendar years, in addition to the amounts permitted for such calendar year, the amount of such purchases, redemptions or other acquisitions or retirements for value permitted to have been made but not made in any preceding calendar year up to a maximum of $9.0 million in any calendar year; and provided further that such amount in any calendar year may be increased by an amount not to exceed (i) the net cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the issuer (or the Parent to the extent such net cash proceeds are contributed to the common equity of the issuer) to employees, officers, directors or consultants of the issuer and its Restricted Subsidiaries that occurs after the date of the Indenture (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments pursuant to clause (2) above or previously applied to the payment of Restricted Payments pursuant to this clause (5)) plus (ii) the cash proceeds of key man life insurance policies received by the issuer and its Restricted Subsidiaries after the date of the Indenture less any amounts previously applied to the payment of Restricted Payments pursuant to this clause (5); provided further that cancellation of Indebtedness owing to the issuer from employees, officers, directors and consultants of the issuer or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the issuer from such Persons will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provisions of the Indenture; provided further that the net cash proceeds from such sales of Equity Interests described in clause (i) of this clause (5) shall be excluded from clause 3(b) of the preceding paragraph to the extent such proceeds have been or are applied to the payment of Restricted Payments pursuant to this clause (5);

(6) the payment of dividends or other distributions or the making of loans or advances to the Parent in amounts required for the Parent to pay franchise taxes and other fees required to maintain its existence and provide for all other operating costs of the Parent to the extent attributable to the ownership or operation of the issuer and its Restricted Subsidiaries, including, without limitation, in respect of director fees and expenses, administrative, legal and accounting services provided by third parties and other costs and expenses including all costs and expenses with respect to filings with the SEC, of up to an aggregate under this clause (6) of $500,000 per fiscal year plus any indemnification claims made by directors or officers of the Parent attributable to the ownership or operation of the issuer and its Restricted Subsidiaries;

(7) the payment of dividends or other distributions by the issuer to the Parent in amounts required to pay the tax obligations of the Parent attributable to the issuer and its Subsidiaries determined as if the issuer and its Subsidiaries had filed a separate consolidated, combined or unitary return for the relevant taxing jurisdiction; provided that any refunds received by the Parent attributable to the issuer or any of its

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Subsidiaries shall promptly be returned by the Parent to the issuer through a contribution to the common equity of, or the purchase of common stock (other than Disqualified Stock) of the issuer from, the issuer; and provided further that the amount of any such contribution or purchase shall be excluded from clause (3)(b) of the preceding paragraph;

(8) repurchases of Capital Stock deemed to occur upon the cashless exercise of stock options and warrants;

(9) other Restricted Payments not otherwise permitted pursuant to this covenant in an aggregate amount not to exceed $30.0 million;

(10) Restricted Payments to holders of equity interests of M-Foods Holdings Inc. contemplated by the Merger Agreement, including in connection with any post-closing purchase price adjustments pursuant to the Merger Agreement;

(11) the declaration and payment of dividends and distributions to holders of any class or series of Disqualified Stock of the issuer or any of its Restricted Subsidiaries issued or incurred in accordance with the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(12) Investments that are made with Excluded Contributions;

(13) following the first Public Equity Offering of the issuer or the Parent after the date of the Indenture, the payment of dividends on the issuer’s common stock (and, in the case of a Public Equity Offering of the Parent, solely for the purpose of paying dividends on the Parent’s common stock) in an amount not to exceed 6% per annum of the gross proceeds of such Public Equity Offering received by, and in the case of a Public Equity Offering of the Parent, contributed to the common equity capital of, the issuer (other than any such gross proceeds constituting Excluded Contributions);

(14) upon the occurrence of a Change of Control and within 60 days after completion of the offer to repurchase Notes pursuant to the covenant described above under the caption “—Repurchase at the Option of Holders—Change of Control” (including the purchase of all Notes tendered), any purchase or redemption of Indebtedness of the issuer subordinated to the Notes that is required to be repurchased or redeemed pursuant to the terms thereof as a result of such Change of Control, at a purchase price not greater than 101% of the outstanding principal amount thereof (plus accrued and unpaid interest);

(15) dividends paid after September 30, 2004 in an amount equal to any reduction in taxes actually realized by the issuer and its Restricted Subsidiaries in the form of cash refunds or from deductions when applied to offset income or gain as a direct result of (i) the tender costs, including the costs of any premium paid or interest expense, incurred in connection with repurchasing the 11 ³/4% Senior Subordinated Notes due 2011 of Michael Foods, (ii) swap termination costs incurred in connection with terminating interest rate swap arrangements in respect of Indebtedness being refinanced as a result of the transactions, (iii) compensation expense incurred in connection with the repurchase or rollover of stock options or transaction bonuses, or (iv) the write off of deferred financing charges as a result of the refinancing contemplated by the transaction, in each case in connection with the Mergers; provided, that the aggregate amount of dividends pursuant to this clause (15) shall not exceed $30.0 million;

provided, however, that in the case of clauses (2), (3), (4), (5), (6), (9), (11), (13), (14) and (15) above, no Default or Event of Default has occurred and is continuing.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the issuer or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall, if the fair market value thereof exceeds $2.0 million, be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. The Board of Directors’ determination must be based upon an opinion or appraisal issued by an

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accounting, appraisal or investment banking firm of national standing if the fair market value exceeds $15.0 million. Not later than the date of making any Restricted Payment, the issuer shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

Incurrence of Indebtedness and Issuance of Preferred Stock

The issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the issuer will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or preferred stock; provided, however, that the issuer and the Guarantors may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Guarantors may issue preferred stock, if the Fixed Charge Coverage Ratio for the issuer’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.00 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or Disqualified Stock or preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(1) (a) the incurrence by the issuer or any Guarantor of Indebtedness under Credit Facilities (and the incurrence by the Guarantors of guarantees thereof) in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the issuer and the Guarantors thereunder) not to exceed $730.0 million and (b) the incurrence by the issuer or any Guarantor of additional Indebtedness under Credit Facilities (and the incurrence by the Guarantors of guarantees thereof) in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the issuer and the Guarantors thereunder) not to exceed the amount, if any, by which (x) the amount of the Borrowing Base as of the date of such incurrence exceeds (y) the aggregate amount of Indebtedness permitted to be incurred pursuant to the immediately preceding clause (a) as of the date of such incurrence, less, in the case of each of clause (a) and (b) the aggregate amount of all Net Proceeds of Asset Sales applied by the issuer or any Guarantor to repay any Indebtedness under Credit Facilities (and, in the case of any revolving credit Indebtedness under a Credit Facility, to effect a corresponding commitment reduction thereunder) pursuant to the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”;

(2) the incurrence by the issuer or any Guarantor of the Existing Indebtedness;

(3) the incurrence by the issuer and its Restricted Subsidiaries of Indebtedness represented by the Notes to be issued on the date of the Indenture and the related Note Guarantees and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;

(4) the incurrence by the issuer or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price, or cost of construction or improvement, of property (real or personal), plant or equipment used in the business of the issuer or any of its Restricted Subsidiaries (whether through the direct acquisition of such assets or the acquisition of Equity Interests of any Person owning such assets) in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed, at any time outstanding, the greater of (x) $20 million and (y) 5% of Total Tangible Assets;

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(5) the incurrence by the issuer or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (5) or (15) of this paragraph;

(6) the incurrence by the issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the issuer and any of its Restricted Subsidiaries; provided, however, that:

(a) if the issuer or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the issuer, or the Note Guarantee, in the case of a Guarantor; and

(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the issuer or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the issuer or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7) the incurrence by the issuer or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(8) the guarantee by the issuer or any Restricted Subsidiary of Indebtedness of the issuer or a Restricted Subsidiary of the issuer that was permitted to be incurred by another provision of this covenant; provided that, in the case of a guarantee of any Restricted Subsidiary that is not a Guarantor, such Restricted Subsidiary complies with the covenant described below under the caption “— Limitations on Issuances of Guarantees of Indebtedness”;

(9) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the issuer as accrued;

(10) the incurrence by the issuer’s Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the issuer that was not permitted by this clause (10);

(11) the incurrence by the issuer or any of its Restricted Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit in respect of workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance; provided, however, that, upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;

(12) the incurrence by the issuer or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the issuer or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of

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any business, assets or Capital Stock of the issuer or a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that:

(a) that Indebtedness is not reflected on the balance sheet of the issuer or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on that balance sheet for purposes of this clause (a)); and

(b) the maximum assumable liability in respect of that Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of those noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the issuer and/or that Restricted Subsidiary in connection with that disposition;

(13) the issuance of Disqualified Stock or preferred stock by any of the issuer’s Restricted Subsidiaries issued to the issuer or another Restricted Subsidiary; provided that (i) any subsequent issuance or transfer of any Equity Securities that results in such Disqualified Stock or preferred stock being held by a Person other than the issuer or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such shares of Disqualified Stock or preferred stock to a Person that is not either the issuer or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an issuance of such shares of Disqualified Stock or preferred stock that was not permitted by this clause (13);

(14) the incurrence by the issuer or any of its Restricted Subsidiaries of obligations in respect of performance and surety bonds and completion guarantees provided by the issuer or such Restricted Subsidiary in the ordinary course of business;

(15) the incurrence by the issuer or any Guarantor of Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (15), not to exceed $30 million;

(16) the incurrence by the Foreign Restricted Subsidiaries of the issuer of Indebtedness in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Restricted Subsidiaries under any credit facility entered into in connection therewith) not to exceed the greater of (x) $20 million or (y) the amount of the Foreign Borrowing Base as of the date of such incurrence;

(17) the incurrence of any Indebtedness by a Receivables Subsidiary that is not recourse to the issuer or any other Restricted Subsidiary of the issuer (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction; and

(18) contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection in the ordinary course of business.

For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (18) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the issuer will be permitted to classify such item of Indebtedness on the date of its incurrence, and from time to time may reclassify, in any manner that complies with this covenant at such time. Indebtedness under the Credit Agreement and the Senior Unsecured Term Loan Agreement on date of the Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt.

Limitation on Senior Subordinated Debt

The issuer will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to any Senior Debt of the issuer and senior in right

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of payment to the Notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to the Senior Debt of such Guarantor and senior in right of payment to such Guarantor’s Note Guarantee.

Liens

The issuer will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured (or, in the case of subordinated Indebtedness, prior or senior thereto, with the same relative priority as the Notes shall have with respect to such subordinated Indebtedness) until such time as such obligations are no longer secured by a Lien.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the issuer or any of its Restricted Subsidiaries or pay any indebtedness owed to the issuer or any of its Restricted Subsidiaries;

(2) make loans or advances to the issuer or any of its Restricted Subsidiaries; or

(3) transfer any of its properties or assets to the issuer or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) Existing Indebtedness, the Credit Agreement and the Senior Unsecured Term Loan Agreement as in effect on the date of the Indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such encumbrances than those contained in such Existing Indebtedness, the Credit Agreement and the Senior Unsecured Term Loan Agreement, as in effect on the date of the Indenture;

(2) the Indenture, the Notes and the Note Guarantees or by other Indebtedness of the issuer or of a Guarantor which is pari passu in right of payment with the Notes or Note Guarantees, as applicable, incurred under an indenture pursuant to the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; provided that the encumbrances and restrictions are no more restrictive, taken as a whole, than those contained in the Indenture;

(3) applicable law or regulation;

(4) any agreements or instrument governing Indebtedness or Capital Stock of a Person acquired by the issuer or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred;

(5) customary non-assignment provisions in leases entered into in the ordinary course of business;

(6) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the preceding paragraph;

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(7) an agreement entered into for the sale or disposition of Capital Stock or assets of a Restricted Subsidiary or an agreement entered into for the sale of specified assets (in either case, so long as such encumbrance or restriction, by its terms, terminates on the earlier of the termination of such agreement or the consummation of such agreement and so long as such restriction applies only to the Capital Stock or assets to be sold);

(8) Permitted Refinancing Indebtedness, provided that the encumbrances and restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

(9) Permitted Liens securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Lien;

(10) customary limitations on the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business;

(11) any Purchase Money Note, or other Indebtedness or contractual requirements of a Receivables Subsidiary in connection with a Qualified Securitization Transaction; provided that such restrictions only apply to such Receivables Subsidiary; and

(12) cash or other deposits or net worth imposed by customers or agreements entered into in the ordinary course of business.

Merger, Consolidation or Sale of Assets

The issuer will not, directly or indirectly, consolidate or merge with or into another Person (whether or not the issuer is the surviving corporation), and the issuer will not, and will not cause or permit any Restricted Subsidiary to, sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the issuer and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person (including by way of consolidation or merger), unless:

(1) either: (a) the issuer or such Restricted Subsidiary, as the case may be, is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the issuer or such Restricted Subsidiary) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state thereof or the District of Columbia; provided that, in the case such Person is a limited liability company or a partnership, a co-obligor of the Notes is a corporation;

(2) the Person formed by or surviving any such consolidation or merger (if other than the issuer or such Restricted Subsidiary) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the issuer or such Restricted Subsidiary (if such Restricted Subsidiary is a Guarantor), as the case may be, under the Notes, the Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

(3) immediately after such transaction and any related financing transactions, no Default or Event of Default exists; and

(4) the issuer or the Person formed by or surviving any such consolidation or merger (if other than the issuer), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made, will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” or if not, the Fixed Charge Coverage Ratio on such basis is higher than the Fixed Charge Coverage Ratio immediately prior to such transactions.

In addition, neither the issuer nor any Restricted Subsidiary may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This “Merger,

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Consolidation or Sale of Assets” covenant will not apply to (i) a sale, assignment, transfer, conveyance or other disposition of assets between or among the issuer and any of its Restricted Subsidiaries or (ii) the Mergers on the terms set forth in the Merger Agreement and as described in this prospectus.

Transactions with Affiliates

The issuer will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate on or after the Issue Date (each, an “Affiliate Transaction”), unless:

(1) such Affiliate Transaction is on terms that are no less favorable to the issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the issuer or such Restricted Subsidiary with an unrelated Person; and

(2) the issuer delivers to the Trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, an opinion as to the fairness to the issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) any consulting or employment agreement or arrangement entered into by the issuer or any of its Restricted Subsidiaries approved by a majority of the disinterested members of the Board of Directors of the issuer;

(2) transactions between or among the issuer and/or its Restricted Subsidiaries;

(3) payment of reasonable directors fees to directors of the issuer and the Parent and the provision of customary indemnification to directors and officers of the issuer and the Parent;

(4) sales of Equity Interests (other than Disqualified Stock) to Affiliates of the issuer;

(5) any tax sharing agreement or arrangement and payments pursuant thereto among the issuer and its Subsidiaries and any other Person with which the issuer or its Subsidiaries is required or permitted to file a consolidated, combined or unitary tax return or with which the issuer or any of its Restricted Subsidiaries is or could be part of a consolidated, combined or unitary group for tax purposes in amounts not otherwise prohibited by the Indenture;

(6) Restricted Payments that are permitted by the provisions of the Indenture described above under the caption “—Restricted Payments” or any Permitted Investment;

(7) the payment (directly or through the Parent) of annual management, consulting, monitoring and advising fees and related expenses to the Equity Sponsor and its respective Affiliates pursuant to management agreements entered into in connection with the Mergers pursuant to the Merger Agreement and as described in this prospectus;

(8) payments by the issuer or any of its Restricted Subsidiaries to the Equity Sponsor and its Affiliates for any financial advisory, financing, underwriting or placement services or in respect of other investment

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banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by the majority of the Board of Directors of the issuer in good faith and are in an amount not to exceed the greater of (i) $1.0 million or (ii) 1.25% of the aggregate transaction value (including enterprise value in connection with acquisitions or divestitures) (or portion thereof) in respect of which such services are rendered;

(9) loans to employees that are approved in good faith by a majority of the Board of Directors of the issuer in an amount not to exceed $3.0 million outstanding at any time and advances and expense reimbursements to employees in the ordinary course of business;

(10) agreements (and payments relating thereto) entered into in connection with the Merger Agreement and as described in this prospectus, as the same may be amended, modified or replaced from time to time, so long as any amendment, modification or replacement is not materially less favorable to the issuer and its Restricted Subsidiaries than the agreement described in this prospectus and in effect on the date of the Indenture;

(11) transactions with a joint venture engaged in a Permitted Business; provided that all the outstanding ownership interests of such joint venture are owned only by the issuer, its Restricted Subsidiaries and Persons who are not Affiliates of the issuer; and

(12) transactions between a Receivables Subsidiary and any Person in which the Receivables Subsidiary has an Investment.

Additional Note Guarantees

If the issuer or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary (other than a Receivables Subsidiary) on or after the date of the Indenture, then that newly acquired or created Domestic Subsidiary (other than an Immaterial Subsidiary) must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee within 20 Business Days of the date on which it was acquired or created.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of the issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default; provided that in no event shall (i) there be any Unrestricted Subsidiaries on or immediately following the date of the Indenture and (ii) the business currently operated by the Egg Products Division be transferred to or held by an Unrestricted Subsidiary. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by the issuer and its Restricted Subsidiaries in the Subsidiary so designated (after giving effect to any sale of Equity Interests of such Subsidiary in connection with such designation) will be deemed to be a Restricted Investment made as of the time of such designation and will either reduce the amount available for Restricted Payments under the first paragraph of the covenant described above under the caption “—Restricted Payments” or reduce the amount available for future Investments under one or more clauses of the definition of “Permitted Investments.” That designation will only be permitted if such Investment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the issuer of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

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Limitations on Issuances of Guarantees of Indebtedness

The issuer will not permit any of its Restricted Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to secure the payment of any other Indebtedness of the issuer or any other Restricted Subsidiary (other than a Guarantee or pledge by a Foreign Restricted Subsidiary securing the payment of Indebtedness of another Foreign Restricted Subsidiary) unless either (1) such Restricted Subsidiary is a Guarantor or (2) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari passu with such Subsidiary’s Guarantee of or pledge to secure such other Indebtedness, unless such other Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be subordinated to the Guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt.

Notwithstanding the preceding paragraph, any Note Guarantee will provide by its terms that it will be automatically and unconditionally released and discharged under the circumstances described above under the caption “—Note Guarantees.” The form of the Note Guarantee will be attached as an exhibit to the Indenture.

Business Activities

The issuer will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses.

Payments for Consent

The issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports

Whether or not required by the Commission, so long as any Notes are outstanding, the issuer will furnish to the Trustee on behalf of the Holders of Notes, within the time periods specified in the Commission’s rules and regulations:

(1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the issuer were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the issuer’s certified independent accountants; and

(2) all current reports that would be required to be filed with the Commission on Form 8-K if the issuer were required to file such reports.

In addition, following the date by which the issuer is required to consummate the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the Commission, the issuer will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission’s rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the issuer and the Guarantors have agreed that, for so long as any Notes (but not the Exchange Notes) remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

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If the issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the financial condition and results of operations of the issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the issuer.

Events of Default and Remedies

Each of the following is an Event of Default:

(1) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes whether or not prohibited by the subordination provisions of the Indenture;

(2) default in payment when due of the principal of, or premium, if any, on the Notes, whether or not prohibited by the subordination provisions of the Indenture;

(3) failure by the issuer or any of its Restricted Subsidiaries to comply with the provisions described under the captions “—Repurchase at the Option of Holders—Change of Control,” “—Repurchase at the Option of Holders—Asset Sales,” or “—Certain Covenants—Merger, Consolidation or Sale of Assets”;

(4) failure by the issuer or any of its Restricted Subsidiaries for 45 days after notice by the Trustee or by Holders of at least 25% in principal amount of the then outstanding Notes to comply with any of the other agreements in the Indenture;

(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the issuer or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the issuer or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, if that default:

(a) is caused by a failure to make any payment when due at the final maturity of such Indebtedness (a “Payment Default”); or

(b) results in the acceleration of such Indebtedness prior to its express maturity;

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $15.0 million or more;

(6) failure by the issuer or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $15.0 million, which judgments are not paid, discharged or stayed for a period of 60 days after such judgments have become final and non-appealable and, in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree that is not promptly stayed;

(7) except as permitted by the Indenture, any Note Guarantee of a Guarantor (other than an Immaterial Guarantor) shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (other than an Immaterial Guarantor), or any Person acting on behalf of any Guarantor (other than an Immaterial Guarantor), shall deny or disaffirm its obligations under its Note Guarantee; and

(8) certain events of bankruptcy or insolvency with respect to the issuer or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary.

In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that, taken together) would

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constitute a Significant Subsidiary), all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately by notice in writing to the issuer specifying the respective Event of Default; provided, however, that so long as any Indebtedness permitted to be incurred pursuant to the Credit Agreement shall be outstanding, that acceleration shall not be effective until the earlier of (1) an acceleration of Indebtedness under the Credit Agreement; or (2) five business days after receipt by the issuer and the Agent under the Credit Agreement of written notice of the acceleration of the Notes.

Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest or Liquidated Damages) if it determines that withholding notice is in their interest.

The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or Liquidated Damages on, or the principal of, the Notes.

The issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, the issuer is required to deliver to the Trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of the issuer or any Guarantor, as such, shall have any liability for any obligations of the issuer or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Legal Defeasance and Covenant Defeasance

The issuer may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and all obligations of the Guarantors discharged with respect to their Note Guarantees (“Legal Defeasance”) except for:

(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Liquidated Damages, if any, on such Notes when such payments are due from the trust referred to below;

(2) the issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the Trustee, and the issuer’s and the Guarantor’s obligations in connection therewith; and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the issuer may, at its option and at any time, elect to have the obligations of the issuer and the Guarantors released with respect to certain covenants that are described in the Indenture (“Covenant

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Defeasance”) and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “Events of Default” will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and Liquidated Damages, if any, on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the issuer must specify whether the Notes are being defeased to maturity or to a particular redemption date;

(2) in the case of Legal Defeasance, the issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case, to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument to which the issuer or any of its Subsidiaries is a party or by which the issuer or any of its Subsidiaries is bound, including the Credit Agreement and the Senior Unsecured Term Loan Agreement;

(6) the issuer must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the issuer with the intent of preferring the Holders of Notes over the other creditors of the issuer with the intent of defeating, hindering, delaying or defrauding creditors of the issuer or others; and

(7) the issuer must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

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Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder):

(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions, or waive any payment, with respect to the redemption of the Notes (other than payment provisions relating to the covenant described under the caption “—Repurchase at Option of Holders”);

(3) reduce the rate of or change the time for payment of interest on any Note;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration);

(5) make any Note payable in money other than U.S. dollars;

(6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium or Liquidated Damages, if any, on the Notes;

(7) release any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture; or

(8) make any change in the preceding amendment and waiver provisions.

In addition, any amendment to, or waiver of, the provisions of the Indenture relating to subordination that adversely affects the rights of the Holders of the Notes will require the consent of the Holders of at least 75% in aggregate principal amount of Notes then outstanding. Any amendment to, or waiver of, the provisions of the Indenture relating to subordination or legal or covenant defeasance will require the consent of the Agent under the Credit Agreement.

Notwithstanding the preceding, without the consent of any Holder of Notes, the issuer, the Guarantors and the Trustee may amend or supplement the Indenture or the Notes:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the issuer’s or any Guarantor’s obligations to Holders of Notes in the case of a merger or consolidation or sale of all or substantially all of the issuer’s or such Guarantor’s assets;

(4) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect in any material respect the legal rights under the Indenture of any such Holder;

(5) to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

(6) to provide for the issuance of Additional Notes in accordance with the Indenture;

(7) to add Guarantors with respect to the Notes or to secure the Notes;

(8) to comply with the rules of any applicable securities depositary;

(9) to provide for a successor trustee in accordance with the terms of the Indenture or to otherwise comply with any requirement of the Indenture; or

(10) to conform the text of the Indenture or the Notes to any provision of the Description of Notes to the extent that such provision was intended to be a verbatim recitation of the text of this Description of Notes.

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Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when the issuer or any Guarantor have paid or caused to be paid all sums payable by it under the Indenture and:

either:

(1) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the issuer) have been delivered to the Trustee for cancellation; or

(2) (a) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year, including as a result of a redemption notice properly given pursuant to the Indenture, and the issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued interest to the date of maturity or redemption; (b) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the issuer or any Guarantor is a party or by which the issuer or any Guarantor is bound; and (c) the issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes or on the redemption date, as the case may be.

In addition, the issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Concerning the Trustee

If the Trustee becomes a creditor of the issuer or any Guarantor, the Indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest, it must eliminate such conflict within 90 days or apply to the Commission for permission to continue or resign.

The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Additional Information

Anyone who receives this prospectus may obtain a copy of the Indenture and Registration Rights Agreement without charge by writing to Michael Foods, Inc., 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, Attention: Chief Financial Officer.

Book-Entry, Delivery and Form

The registered notes will be represented by one or more notes in registered, global form without interest coupons (collectively, the “Global Notes”). The Global Notes will be deposited upon issuance with the Trustee as

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custodian for The Depository Trust Company (“DTC”), in New York, New York, and registered in the name of DTC or its nominee, for credit to an account of a direct or indirect participant in DTC, including the Euroclear System (“Euroclear”) and Clearstream Banking, S.A. (“Clearstream”).

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in certificated form except in the limited circumstances described below. See “—Exchange of Global Notes for Certificated Notes.” Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of Notes in certificated form.

Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.

Depository Procedures

The following description of the operations and procedures of DTC, Euroclear and Clearstream is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The issuer takes no responsibility for these operations and procedures and urges investors to contact the system or its participants directly to discuss these matters.

DTC has advised the issuer that DTC is a limited-purpose trust issuer created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

DTC has also advised the issuer that, pursuant to procedures established by it:

(1) upon deposit of the Global Notes, DTC will credit the accounts of Participants with portions of the principal amount of the Global Notes; and

(2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes).

Investors in the Global Notes who are Participants in DTC’s system may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are Participants in such system. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

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Except as described below, owners of interest in the Global Notes will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or “Holders” thereof under the Indenture for any purpose.

Payments in respect of the principal of, and interest and premium and Liquidated Damages, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the issuer and the Trustee will treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payments and for all other purposes. Consequently, neither the issuer, the Trustee nor any agent of the issuer or the Trustee has or will have any responsibility or liability for:

(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or

(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

DTC has advised the issuer that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the issuer. Neither the issuer nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Notes, and the issuer and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

Cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

DTC has advised the issuer that it will take any action permitted to be taken by a Holder of Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Notes for Notes in certificated form, and to distribute such Notes to its Participants.

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Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither the issuer nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

A Global Note is exchangeable for definitive Notes in registered certificated form (“Certificated Notes”) if:

(1) DTC (a) notifies the issuer that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act, and in each case the issuer fails to appoint a successor depositary;

(2) the issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or

(3) there shall have occurred and be continuing a Default or Event of Default with respect to the Notes.

In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

Exchange of Certificated Notes for Global Notes

Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Notes.

Same Day Settlement and Payment

The issuer will make payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. The issuer will make all payments of principal, interest and premium and Liquidated Damages, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder’s registered address. The Notes represented by the Global Notes are expected to be eligible to trade in the PORTAL market and to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The issuer expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised the issuer that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

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Governing Law

The Indenture and the Notes will be governed by, and construed in accordance with, the laws of the State of New York.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

“Asset Acquisition” means (a) an Investment by the issuer or any of its Restricted Subsidiaries in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary of the issuer, or shall be merged with or into the issuer or any Restricted Subsidiary of the issuer, or (b) the acquisition by the issuer or any Restricted Subsidiary of the issuer of all or substantially all of the assets of any other Person or any division or line of business of any other Person.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the issuer and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and

(2) the issuance or sale of Equity Interests by any of the issuer’s Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) any single transaction or series of related transactions that involves assets having a fair market value of less than $5.0 million;

(2) a transfer of assets between or among the issuer and its Restricted Subsidiaries;

(3) an issuance of Equity Interests by a Restricted Subsidiary to the issuer or to another Restricted Subsidiary;

(4) the sale, lease, sub-lease, license, sub-license or consignment of equipment, inventory or other assets in the ordinary course of business, including leases with a duration of no greater than 24 months with respect to facilities which are temporarily not in use or pending their disposition;

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(5) the sale or other disposition of cash or Cash Equivalents;

(6) a Restricted Payment or Permitted Investment that is permitted by the covenant described above under the caption “—Certain Covenants—Restricted Payments”;

(7) the licensing of intellectual property to third Persons on customary terms as determined by the Board of Directors in good faith;

(8) any sale of accounts receivable, or participations therein, in connection with any Qualified Receivables Transaction;

(9) any sale or disposition of any property or equipment that has become damaged, worn-out, obsolete, condemned, given over in lieu of deed or otherwise unsuitable or not required for the ordinary course of the business of the issuer and its Restricted Subsidiaries; and

(10) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” shall have a corresponding meaning.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or a committee thereof authorized to exercise the power of the board of directors of such corporation;

(2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and

(3) with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrowing Base” means, as of any date, an amount equal to:

(1) 80% of the face amount of all accounts receivable owned by the issuer and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more than 90 days past due; plus

(2) 50% of the book value of all inventory owned by the issuer and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date;

all calculated on a consolidated basis and in accordance with GAAP.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

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(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” means:

(1) United States dollars;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than 360 days from the date of acquisition;

(3) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a rating of P-1 or better from Moody’s Investor Service, Inc. or A-1 or better from Standard & Poor’s Rating Services;

(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper having the highest rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within six months after the date of acquisition; and

(6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Parent and its Restricted Subsidiaries or the issuer and its Restricted Subsidiaries, in each case, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Principals or Related Parties of the Principals;

(2) the adoption of a plan relating to the liquidation or dissolution of the Parent or the issuer;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principals and their Related Parties, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the voting power of the Voting Stock of the issuer or the Parent, as the case may be;

(4) the first day on which a majority of the members of the Board of Directors of the Parent or the issuer are not Continuing Directors; or

(5) the Parent or the issuer consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Parent or the issuer, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Parent, the issuer or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where (A) the Voting Stock of the Parent or the issuer outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person

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constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principals and their Related Parties, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the voting power of the Voting Stock of the surviving or transferee person.

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period and, without duplication, plus:

(1) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(2) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether or not paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

(3) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; plus

(4) any management fees paid by the issuer to Vestar Capital Partners L.P. or Thomas H. Lee Partners L.P., as the case may be, in such period, to the extent that any such management fees were deducted in computing such Consolidated Net Income; provided that the maximum aggregate amount of such management fees in any 12-month period shall not exceed the greater of $1.5 million and an amount equal to 1.0% of the consolidated earnings before interest, taxes, depreciation and amortization of the issuer and its Subsidiaries for such period as computed in the management agreements entered into in connection with the Mergers; minus

(5) non-cash items increasing such Consolidated Net Income for such period, excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period.

Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of the issuer shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the issuer only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the issuer by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(1) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

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(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;

(3) the Net Income (or loss) of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded;

(4) the cumulative effect of a change in accounting principles shall be excluded;

(5) any increase in cost of sales as a result of the step-up in inventory valuation arising from applying the purchase method of accounting in accordance with GAAP in connection with any acquisition consummated after the date of the Indenture, net of taxes, shall be excluded;

(6) non-cash charges relating to employee benefit or other management compensation plans of the Parent (to the extent such non-cash charges relate to plans of the Parent for the benefit of members of the Board of Directors of the issuer (in their capacity as such) or employees of the issuer and its Restricted Subsidiaries), the issuer or any of its Restricted Subsidiaries or any non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards of the Parent (to the extent such non-cash charges relate to plans of the Parent for the benefit of members of the Board of Directors of the issuer (in their capacity as such) or employees of the issuer and its Restricted Subsidiaries), the issuer or any of its Restricted Subsidiaries (excluding in each case any non-cash charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense incurred in a prior period) in each case, to the extent that such non-cash charges are deducted in computing such Consolidated Net Income shall be excluded; and

(7) any goodwill impairment charges shall be excluded.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the issuer or the Parent, as the case may be, who:

(1) was a member of such Board of Directors on the date of the Indenture or the date of the Mergers; or

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

“Credit Agreement” means that certain Credit Agreement, to be dated as of the date of the Indenture, by and among the issuer, the Parent, Bank of America, N.A., as Administrative Agent, Deutsche Bank Securities Inc. and UBS Securities LLC, as co-Syndication Agents, and the other Lenders named therein providing for up to $495.0 million in term loan borrowings and $100.0 million of revolving credit borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced, restated, substituted or refinanced in whole or in part from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Subsidiaries of the issuer as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.

“Credit Facilities” means one or more debt facilities (including, without limitation, the Credit Agreement and the Senior Unsecured Term Loan Agreement), commercial paper facilities or indentures, in each case with banks or other institutional lenders or a trustee providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or issuances of notes, in each case as amended, modified, renewed, refunded, replaced, restated, substituted or refinanced in whole or in part from time to time.

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“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the issuer or any of its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the issuer or such Subsidiary in order to satisfy applicable statutory or regulatory obligations; and provided further that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “—Certain Covenants—Restricted Payments.”

“Domestic Subsidiary” means any Restricted Subsidiary that was formed under the laws of the United States or any state thereof or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the issuer.

“Egg Products Division” means those operations and Subsidiaries of the issuer and its Restricted Subsidiaries which are principally engaged in the egg products business.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means an offering (including in a private placement) of the Equity Interests (other than Disqualified Stock) of the issuer or the Parent, other than public offerings with respect to the Equity Interests registered on Form S-8.

“Equity Sponsor” means Thomas H. Lee Partners, L.P., a Delaware limited partnership.

“Excluded Contributions” means the net cash proceeds received by the issuer after the date of the Indenture from (a) contributions to its common equity capital and (b) the sale (other than to a Subsidiary or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the issuer or any of its Subsidiaries) of Capital Stock (other than Disqualified Stock) of the issuer, in each case designated within 60 days of the receipt of such net cash proceeds as Excluded Contributions pursuant to an Officers’ Certificate, the cash proceeds of which are excluded from the calculation set forth in the second clause (3) of the first paragraph of the covenant described above under the “—Certain Covenants—Restricted Payments.”

“Existing Indebtedness” means Indebtedness outstanding on the date of the Indenture, other than under the Credit Agreement, the Senior Unsecured Term Loan Agreement and the Indenture.

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is

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made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) the Recapitalization, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made by the issuer or any Restricted Subsidiary of the issuer during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis including Pro Forma Cost Savings assuming that the Recapitalization and all such Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (and the change in any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary of the issuer or was merged with or into the issuer or any Restricted Subsidiary of the issuer since the beginning of such period) shall have made any Investment, acquisition, disposition, merger, consolidation or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or discontinued operation had occurred at the beginning of the applicable four-quarter period; and

(2) in calculating Fixed Charges attributable to interest on any Indebtedness computed on a pro forma basis, (a) interest on outstanding Indebtedness determined on a fluctuating basis as of the Calculation Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Calculation Date; (b) if interest on any Indebtedness actually incurred on the Calculation Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Calculation Date will be deemed to have been in effect during the four-quarter period; and (c) notwithstanding clause (a) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to interest rate swaps, caps or collars, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreement.

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus

(2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

(4) the product of (a) all dividends and distributions, whether paid or accrued and whether or not in cash, on any series of preferred stock or Disqualified Stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the issuer (other than Disqualified Stock) or to the issuer or a Restricted Subsidiary of the issuer, times (b) a fraction, the

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numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“Foreign Borrowing Base” means, as of any date, an amount equal to:

(1) 80% of the face amount of all accounts receivable owned by the Foreign Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more than 90 days past due; plus

(2) 50% of the book value of all inventory owned by the Foreign Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date;

all calculated on a consolidated basis and in accordance with GAAP.

“Foreign Restricted Subsidiary” means any Restricted Subsidiary of the issuer incorporated in any jurisdiction outside the United States.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Indenture.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

“Guarantors” means:

(1) each direct or indirect Domestic Subsidiary of the issuer; and

(2) any other subsidiary that executes a Note Guarantee in accordance with the provisions of the Indenture; and their respective successors and assigns.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed for the purpose of fixing, hedging or swapping interest rate risk;

(2) commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements designed for the purpose of fixing, hedging or swapping commodity price risk; and

(3) foreign exchange contracts, currency swap agreements and other agreements or arrangements designed for the purpose of fixing, hedging or swapping foreign currency exchange rate risk.

“Holdings” means M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.), a Delaware corporation and the immediate parent of the issuer.

“Immaterial Guarantor” means any Guarantor that is an Immaterial Subsidiary.

“Immaterial Subsidiary” means any Subsidiary of the issuer that has less than $100,000 in total assets.

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“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of:

(1) borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) banker’s acceptances;

(4) representing Capital Lease Obligations;

(5) the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or

(6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person.

The amount of any Indebtedness outstanding as of any date shall be:

(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount;

(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness; and

(3) with respect to Indebtedness of another Person secured by a Lien on the assets of the Company or any of its Restricted Subsidiaries, the lesser of the fair market value of the property secured or the amount of the secured Indebtedness.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made consistent with past practices), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the issuer or any Restricted Subsidiary of the issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the issuer, the issuer shall be deemed to have made a Restricted Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The acquisition by the issuer or any Restricted Subsidiary of the issuer of a Person that holds an Investment in a third Person shall be deemed to be an Investment by the issuer or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.”

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

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“Merger Agreement” means the Agreement and Plan of Merger, dated as of October 10, 2003, by and among Holdings, THL Food Products, M-Foods Holdings, M-Foods Investors, LLC, as representative of the Stockholders identified therein, and the Stockholders identified therein.

“Mergers” means the merger of THL Food Products with and into M-Foods Holdings, with M-Foods Holdings continuing as the surviving corporation, and the subsequent merger of M-Foods Holdings with and into Michael Foods, with M-Foods Holdings continuing as the surviving corporation and changing its name to “Michael Foods, Inc.,” all in accordance with the terms of the Merger Agreement.

“M-Foods Holdings” means M-Foods Holdings, Inc., a Delaware corporation.

“Michael Foods” means Michael Foods, Inc., a Minnesota corporation.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any Asset Sale (without reference to the $5.0 million limitation); or (b) the disposition of any other assets by such Person or any of its Restricted Subsidiaries (other than in the ordinary course of business) or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2) any extraordinary, unusual or nonrecurring gain (or loss) (including nonrecurring gains or losses of the issuer and its Subsidiaries incurred in connection with the Merger Agreement and the related refinancing), together with any related provision for taxes on such extraordinary, unusual or nonrecurring gain (or loss).

“Net Proceeds” means the aggregate cash proceeds received by the issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale or disposition of such non-cash consideration, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness (other than revolving credit Indebtedness, unless there is a required reduction in commitments) secured by a Lien on the asset or assets that were the subject of such Asset Sale and any (1) reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP and (2) any reserve or payment with respect to any liabilities associated with such asset or assets and retained by the issuer after such sale or other disposition thereof, including, without limitation, severance costs, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the issuer nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender;

(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the issuer or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

(3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the issuer or any of its Restricted Subsidiaries.

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“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages, costs, expenses and other liabilities payable under the documentation governing any Indebtedness.

“Parent” means any direct or indirect parent company of the issuer.

“Permitted Business” means any business conducted or proposed to be conducted (as described in this prospectus) by the issuer and its Restricted Subsidiaries on the date of the Indenture and other businesses reasonably related or ancillary thereto.

“Permitted Investments” means:

(1) any Investment in the issuer or in a Restricted Subsidiary of the issuer;

(2) any Investment in Cash Equivalents;

(3) any Investment by the issuer or any Restricted Subsidiary of the issuer in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the issuer; or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the issuer or a Restricted Subsidiary of the issuer;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale or other sale of assets that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”;

(5) any Investment the payment for which consists of Equity Interests (other than Disqualified Stock) of the issuer or the Parent (which Investment, in the case of the Parent, is contributed to the common equity capital of the issuer; provided that any such contribution shall be excluded from clause 3(b) of the first paragraph of the covenant described under the caption “—Certain Covenants—Restricted Payments”);

(6) Hedging Obligations;

(7) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (7) since the date of the Indenture, not to exceed $20.0 million;

(8) any Investment of the issuer or any of its Restricted Subsidiaries existing on the date of the Indenture;

(9) loans to employees that are approved in good faith by a majority of the Board of Directors of the issuer in an amount not to exceed $3.0 million outstanding at any time;

(10) any Investment acquired by the issuer or any of its Restricted Subsidiaries:

(a) in exchange for any other Investment or accounts receivable held by the issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of a Person; or

(b) as a result of a foreclosure by the issuer or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(11) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;

(12) Investments in joint ventures engaged in a Permitted Business not in excess of $20.0 million in the aggregate outstanding at any one time;

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(13) Investments by the issuer or a Restricted Subsidiary of the issuer in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person, in each case, in connection with a Qualified Receivables Transaction; and

(14) any Guarantee otherwise permitted under the Indenture.

“Permitted Liens” means:

(1) Liens on the assets of the issuer and any Guarantor securing Senior Debt that was permitted by the terms of the Indenture to be incurred;

(2) Liens in favor of the issuer or any Restricted Subsidiary of the Company;

(3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the issuer or any Restricted Subsidiary of the issuer; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the issuer or the Restricted Subsidiary;

(4) Liens on property existing at the time of acquisition thereof by the issuer or any Restricted Subsidiary of the issuer; provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the issuer or the Restricted Subsidiary;

(5) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” covering only the assets acquired with such Indebtedness;

(6) Liens of the issuer and its Restricted Subsidiaries existing on the date of the Indenture;

(7) Liens incurred in the ordinary course of business of the issuer or any Restricted Subsidiary of the issuer with respect to obligations that do not exceed $5.0 million at any one time outstanding;

(8) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other similar obligations (exclusive of obligations for the payment of borrowed money) incurred in the ordinary course of business;

(9) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(10) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith;

(11) Liens to secure Indebtedness of any Foreign Restricted Subsidiary permitted by clause (16) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” covering only the assets of such Foreign Restricted Subsidiary; and

(12) Liens on assets of a Receivables Subsidiary arising in connection with a Qualified Receivables Transaction.

“Permitted Refinancing Indebtedness” means any Indebtedness of the issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the issuer or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended,

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refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of any reasonably determined premium and other amounts necessary to accomplish such refinancing and such reasonable fees and expenses incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(4) such Indebtedness is incurred either by the issuer or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock issuer, trust, unincorporated organization, limited liability issuer or government or other entity.

“Principals” means the Equity Sponsor and its Affiliates.

“Pro Forma Cost Savings” means, with respect to any period, the reduction in net costs and related adjustments that (i) were directly attributable to an Asset Acquisition that occurred during the four-quarter period or after the end of the four-quarter period and on or prior to the Calculation Date and calculated on a basis that is consistent with Regulation S-X under the Securities Act as in effect and applied as of the date of the Indenture, (ii) were actually implemented by the business that was the subject of any such Asset Acquisition within six months after the date of the Asset Acquisition and prior to the Calculation Date that are supportable and quantifiable by the underlying accounting records of such business or (iii) relate to the business that is the subject of any such Asset Acquisition and that the issuer reasonably determines are probable based upon specifically identifiable actions to be taken within six months of the date of the Asset Acquisition and, in the case of each of (i), (ii) and (iii), are described, as provided below, in an officer’s certificate, as if all such reductions in costs had been effected as of the beginning of such period. Pro Forma Cost Savings described above shall be accompanied by a certificate delivered to the Trustee from the issuer’s Chief Financial Officer that outlines the specific actions taken or to be taken, the net cost savings achieved or to be achieved from each such action and that, in the case of clause (iii) above, such savings have been determined to be probable.

“Public Equity Offering” means an offer and sale for cash of common stock (other than Disqualified Stock) of the issuer or the Parent pursuant to a registration statement that has been declared effective by the Commission pursuant to the Securities Act (other than a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the issuer).

“Purchase Money Note” means a promissory note evidencing a line of credit, or evidencing other Indebtedness, owed to the issuer or any Restricted Subsidiary of the issuer in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than amounts required to be established as reserves pursuant to agreement, amounts paid to investors in respect of interest, principal and other amounts owning to such investors and amounts paid in connection with the purchase of newly generated receivables.

“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the issuer or by any Restricted Subsidiary of the issuer pursuant to which the issuer or any Restricted Subsidiary of the issuer may sell, convey or otherwise transfer to a Receivables Subsidiary, any accounts

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receivable (whether now existing or arising in the future) of the issuer or any Restricted Subsidiary of the issuer and any asset related thereto, including, without limitation, all collateral securing such accounts receivable, and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets that are customarily transferred, or in respect of which security interests are customarily granted, in connection with an asset securitization transaction involving accounts receivable.

“Recapitalization” means the Mergers and all related transactions as described in this prospectus.

“Receivables Subsidiary” means a Subsidiary of the issuer (other than a Guarantor) that engages in no activities other than in connection with the financing of accounts receivables and that is designated by the Board of Directors of the issuer (as provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the issuer or any other Restricted Subsidiary of the issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the issuer or any other Restricted Subsidiary of the issuer in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the issuer or any other Restricted Subsidiary of the issuer, directly or indirectly, contingently or otherwise to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the issuer nor any other Restricted Subsidiary of the issuer has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the issuer or such other Restricted Subsidiary of the issuer than those that might be obtained at the time from Persons that are not Affiliates of the issuer, other than fees payable in the ordinary course of business in connection with servicing accounts receivable, and (c) to which neither the issuer nor any other Restricted Subsidiary of the issuer has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve a certain level of operating results. Any such designation by the Board of Directors of the issuer shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the issuer giving effect to such designation and an officers’ certificate certifying, to the best of such officer’s knowledge and belief after consulting with counsel, that such designation complied with the foregoing conditions.

“Related Party” means:

(1) any controlling stockholder, partner, member, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principal; or

(2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause.

“Replacement Assets” means (1) non-current tangible assets that will be used or useful in a Permitted Business or (2) all or substantially all of the assets of a Permitted Business or a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“Senior Unsecured Term Loan Agreement” means that certain Senior Unsecured Term Loan Agreement, to be dated as of the date of the Indenture, by and among the issuer, the Parent, Bank of America, N.A., as Administrative Agent, Deutsche Bank Securities Inc. and UBS Securities LLC, as co-Syndication Agents, and the other Lenders named therein providing for up to $135.0 million in term loan borrowings including any related

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notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced, restated, substituted or refinanced in whole or in part from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Subsidiaries of the issuer as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article I, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the Indenture.

“Standard Securitization Undertaking” means representations, warrantees, covenants and indemnities entered into by the issuer or any Restricted Subsidiary of the issuer that are reasonably customary in an accounts receivable transaction.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

“Surviving Corporation” means the Surviving Corporation (as defined in the Merger Agreement) upon consummation of the subsequent merger contemplated by Section 8.06 of the Merger Agreement.

“THL Food Products” means THL Food Products Co., a Delaware corporation.

“Total Tangible Assets” means the total consolidated assets, less good will and intangibles, of the issuer and its Restricted Subsidiaries, as shown on the most recent balance sheet of the issuer.

“Unrestricted Subsidiary” means any Subsidiary (other than any Subsidiary in the Egg Products Division) of the issuer that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is not party to any agreement, contract, arrangement or understanding with the issuer or any Restricted Subsidiary of the issuer unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the issuer;

(3) is a Person with respect to which neither the issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results;

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(4) is a guarantor or otherwise directly or indirectly provides credit support for any Indebtedness of the issuer or any of its Restricted Subsidiaries at the time of such designation unless such guarantee or credit support is released upon such designation; and

(5) has at least one director on its Board of Directors that is not a director or executive officer of the issuer or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the issuer or any of its Restricted Subsidiaries.

Any designation of a Restricted Subsidiary of the issuer as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “—Certain Covenants—Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the issuer as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” the issuer shall be in default of such covenant.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material U.S. federal income tax consequences relating to the exchange of old notes for registered notes in the exchange offer. This discussion is a general summary only and does not address all tax aspects relating to the exchange. This discussion deals only with the U.S. federal income tax consequences to persons who hold such notes as capital assets and does not deal with the consequences to special classes of holders of the notes, such as dealers in securities or currencies, brokers, traders that mark-to-market their securities, insurance companies, tax-exempt entities, financial institutions or “financial services entities,” persons with a functional currency other than the U.S. dollar, regulated investment companies, real estate investment trusts, retirement plans, expatriates or former long-term residents of the United States, persons who hold their notes as part of a straddle, hedge, “conversion transaction,” “constructive sale” or other integrated investment, persons subject to the alternative minimum tax, partnerships or other pass-through entities or investors in partnerships or other pass-through entities that hold the notes. The discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and the Treasury Regulations promulgated thereunder, and rulings and judicial interpretations thereof, all as in effect on the date of this prospectus, any of which may be repealed or subject to change, possibly with retroactive effect.

Consequences of Tendering Old Notes

The exchange of your old notes for registered notes in the exchange offer will have no U.S. federal income tax consequences to you. For example, there would be no change in your tax basis and your holding period would carry over to the registered notes. In addition, the U.S. federal income tax consequences of holding and disposing of your registered notes would be the same as those applicable to your old notes.

THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF OLD NOTES FOR REGISTERED NOTES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO IT RELATING TO THE EXCHANGE, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.

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PLAN OF DISTRIBUTION

Any broker-dealer who holds old notes that were acquired for its own account as a result of market-making activities or other trading activities (other than old notes acquired directly from the issuer), may exchange such old notes pursuant to the exchange offer; however, such broker-dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the registered notes received by such broker-dealer in the exchange offer, which prospectus delivery requirement may be satisfied by the delivery of such broker-dealer of this prospectus. We have agreed that, for a period ending on the earlier of (a) 180 days after the registration statement containing this prospectus is declared effective and (b) the date on which a broker-dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until         , 2004, all dealers effecting transactions in the registered notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of registered notes by broker-dealers. Registered notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over the counter market, in negotiated transactions, through the writing of options on the registered notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such registered notes. Any broker-dealer that resells registered notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such registered notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of registered notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

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LEGAL MATTERS

Weil, Gotshal & Manges LLP, New York, New York has passed upon the validity of the registered notes and the related guarantees on our behalf.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements as of December 31, 2002 and for the fiscal year then ended included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of the 2001 predecessor for the fiscal year ended December 31, 2000 and the three months ended March 31, 2001 and the consolidated financial statements of our predecessor as of December 31, 2001 and for the nine months then ended, included in this prospectus have been audited by Grant Thornton LLP, independent accountants, as stated in their report also appearing in this prospectus.

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-4 under the Securities Act with respect to the registered notes. This prospectus, which is a part of the registration statement, omits certain information included in the registration statement and the exhibits thereto. For further information with respect to us and the securities, we refer you to the registration statement and its exhibits. The descriptions of certain contracts and documents contained in this prospectus are summaries and qualified in their entirety by reference to the copies of their contracts or documents filed as an exhibit to the registration statement. You may read and copy any document we file or furnish with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can review our SEC filings, including the registration statement by accessing the SEC’s Internet site at http://www.sec.gov.

Upon completion of the exchange offer, we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, will file reports with the SEC. You may inspect and copy these reports and other information at the address set forth above. You may request copies of the documents, at no cost, by telephone at (952) 258-4000 or by mail to Michael Foods, Inc., 301 Carlson Parkway, Minneapolis, Minnesota 55305.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Unaudited Consolidated Financial Statements Michael Foods, Inc.
Condensed Consolidated Balance Sheets at September 30, 2003 and December 31, 2002 (unaudited)	F-2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2003 and 2002 (unaudited)	F-3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002 (unaudited)	F-5
Notes to Condensed Consolidated Financial Statements (unaudited)	F-6
Audited Consolidated Financial Statements Michael Foods, Inc.
Reports of Independent Accountants	F-22
Consolidated Balance Sheets at December 31, 2002 and 2001	F-25
Consolidated Statements of Operations for the Year Ended December 31, 2002, the Nine Months Ended December 31, 2001, the Three Months Ended March 31, 2001 and for the Year Ended December 31, 2000	F-26
Consolidated Statements of Shareholder’s Equity for the Year Ended December 31, 2002, the Nine Months Ended December 31, 2001, the Three Months Ended March 31, 2001 and for the Year Ended December 31, 2000	F-27
Consolidated Statements of Cash Flows for the Year Ended December 31, 2002, the Nine Months Ended December 31, 2001, the Three Months Ended March 31, 2001 and for the Year Ended December 31, 2000	F-28
Notes to Consolidated Financial Statements	F-29

F-1

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars in thousands)

	September 30, 2003			December 31, 2002
ASSETS
Current assets
Cash and equivalents	$	25,316		$	20,572
Accounts receivable, less allowances		106,162			101,579
Inventories		89,681			95,807
Prepaid expenses and other		10,921			13,571
Assets held for sale		58,909			—
Total current assets		290,989			231,529
Property, plant and equipment, net		230,725			282,353
Other assets
Goodwill		336,094			341,028
Joint ventures and other assets		33,050			38,112
		369,144			379,140
	$	890,858		$	893,022
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
Current maturities of long-term debt	$	13,841		$	17,671
Accounts payable		66,931			65,990
Accrued liabilities
Compensation		14,076			15,251
Insurance		8,841			7,855
Customer programs		40,983			26,484
Income taxes		10,748			7,403
Interest		14,615			9,336
Hedging derivative liability		6,943			11,001
Other		12,822			11,393
Liabilities related to business to be sold		6,813			—
Total current liabilities		196,613			172,384
Long-term debt, less current maturities		428,284			493,718
Deferred income taxes		55,127			47,119
Commitments and contingencies		—			—
Non-controlling interest		—			475
Shareholder’s equity
Common stock, $0.01 par value, 1,000 shares authorized, issued and outstanding		—			—
Additional paid-in capital		147,498			147,498
Retained earnings		63,991			39,476
Accumulated other comprehensive loss		(655	)		(7,648	)
		210,834			179,326
	$	890,858		$	893,022

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-2

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended September 30,

(Unaudited, dollars in thousands)

	2003		2002
Net sales	$	346,065	$	293,954
Cost of sales		286,900		239,777
Gross profit		59,165		54,177
Selling, general and administrative expenses		31,227		29,207
Operating profit		27,938		24,970
Interest expense, net		11,873		12,844
Earnings before income taxes		16,065		12,126
Income tax expense		6,297		4,760
Net earnings	$	9,768	$	7,366

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-3

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Nine months ended September 30,

(Unaudited, dollars in thousands)

	2003		2002
Net sales	$	968,209	$	862,136
Cost of sales		800,753		702,639
Gross profit		167,456		159,497
Selling, general and administrative expenses		91,545		88,656
Operating profit		75,911		70,841
Interest expense, net		35,840		37,840
Earnings before income taxes		40,071		33,001
Income tax expense		15,556		12,960
Net earnings	$	24,515	$	20,041

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-4

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30,

(Unaudited, dollars in thousands)

	2003			2002
Net cash provided by operating activities	$	98,379		$	78,577
Cash flows from investing activities:
Capital expenditures		(22,802	)		(19,242	)
Business acquisition		—			(17,593	)
Investments in joint ventures and other assets		—			2,336
Net cash used in investing activities		(22,802	)		(34,499	)
Cash flows from financing activities:
Proceeds on notes payable and revolving line of credit		—			5,000
Payments on long-term debt		(70,951	)		(20,268	)
Capital contribution from parent		—			656
Net cash used in financing activities		(70,951	)		(14,612	)
Effect of exchange rate changes on cash		118			—
Net increase in cash and equivalents		4,744			29,466
Cash and equivalents at beginning of period		20,572			27,660
Cash and equivalents at end of period	$	25,316		$	57,126

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-5

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE A—2001 MERGER

On April 10, 2001, Michael Foods, Inc. and its subsidiaries (“Michael Foods”, “Company”, “we”, “us”, “our”) was acquired in a transaction (the “Merger”) led by an investor group comprised of a management group led by Michael Foods’ Chairman, President and Chief Executive Officer, Gregg Ostrander; affiliates of Jeffrey Michael, a member of the board of directors; and affiliates of two private equity investment firms, Vestar Capital Partners and Goldner Hawn Johnson & Morrison Incorporated (collectively, “M-Foods Investors, LLC”). Michael Foods, Inc. is a wholly-owned subsidiary of M-Foods Holdings, Inc., which is a subsidiary of M-Foods Investors, LLC. Under the terms of the Merger Agreement, all outstanding shares of Michael Foods common stock were converted into the right to receive $30.10 per share in cash, or value equal thereto, and all outstanding stock options were converted into the right to receive, in cash, $30.10 per share reduced by the exercise price per share for all shares subject to such stock options. The purchase of the outstanding shares was financed through equity financing of approximately $175,000,000, a senior secured credit facility of up to $470,000,000 at market-based variable interest rates, and $200,000,000 of senior subordinated notes at an 11.75% annual interest rate. As a result of the Merger, the stock of pre-merger Michael Foods (“Predecessor”) is no longer publicly traded and, therefore, earnings per share calculations are no longer included for financial statement presentation.

Immediately after the close of the Merger, we contributed the assets of our Dairy Products Division into two limited liability companies, M-Foods Dairy, LLC and M-Foods Dairy TXCT, LLC (collectively, the “Dairy LLCs”) and in exchange received voting preferred and voting common units from these entities equal to the fair value of the net assets contributed, which collectively was approximately $35,800,000. The preferred units issued to us by the Dairy LLCs have an annual 10% preferred return guarantee and represent 100% of the preferred units issued and outstanding. In addition, we received 5% of the common units issued by the Dairy LLCs, which represents 100% of the voting common units issued and outstanding. These common units have a stated value of $25,000. The remaining 95% of the common units, which are non-voting, are owned by M-Foods Dairy Holdings, LLC, another entity which is owned by the same owners or affiliates of such owners, in the same proportion, as the unit holders of M-Foods Investors, LLC. The common unit interests owned by M-Foods Dairy Holdings, LLC were issued in exchange for $475,000 and are reflected as non-controlling interest in the accompanying consolidated balance sheet. See also Note E.

The 2001 Merger was accounted for as a purchase in accordance with Accounting Principles Board Opinion 16, Business Combinations and Emerging Issues Task Force Issue No. 88-16, Basis in Leveraged Buyout Transactions. Accordingly, the acquired assets and liabilities have been recorded at fair value for the interests acquired by new investors and at the carryover basis for continuing investors. As a result, the assets and liabilities were assigned new values, which are part Predecessor cost and part fair value in the same proportions as the carryover basis of the residual interests retained by the continuing management investors and continuing affiliate investors of the Michael family, and the new interests acquired by the new investors. The amount of carryover basis was reflected as a deemed dividend of $66,631,000.

NOTE B—SUBSEQUENT EVENT

On October 10, 2003, THL Food Products Holding Co. and its wholly owned subsidiary, THL Food Products Co., entered into a merger agreement with M-Foods Holdings, Inc., among others, pursuant to which THL Food Products Holding Co. will acquire M-Foods Holdings, Inc. for approximately $1.05 billion, subject to certain adjustments. THL Food Products Co. and THL Food Products Holding Co. are affiliates of Thomas H. Lee Partners, a Boston-based private equity firm.

F-6

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Concurrently with the consummation of the merger transaction, we entered into a new $100 million revolving credit agreement, a $495 million term loan, a $135 million senior unsecured term loan facility and issued $150 million aggregate principal amount of senior subordinated notes.

The merger transaction and these related financing transactions were consummated on November 20, 2003.

NOTE C—BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

We utilize a fiscal year consisting of either 52 or 53 weeks, ending on the Saturday nearest to December 31 each year. The quarters ended September 30, 2003 and 2002 each included 13 weeks of operations. For clarity of presentation, the Company has described both periods presented as if the quarters ended on September 30^th.

In the opinion of management, the unaudited financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the results of operations for the periods indicated. The results of operations and cash flows of the Company for the period ended September 30, 2003 are not necessarily indicative of the results expected for the full year.

These unaudited interim consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations” which provides accounting requirements for retirement obligations associated with tangible long-lived assets. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002 and was adopted by the Company effective January 1, 2003. The adoption of SFAS No. 143 did not have a material effect on our consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value when the liability is incurred. Prior to the adoption of this standard, a liability for an exit cost, as defined by Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring), was recognized at the date of an entity’s commitment to an exit plan. SFAS No. 146 was effective for the Company for exit plans or disposal activities initiated after December 31, 2002. Effective January 1, 2003, we adopted the provisions of SFAS 146, which had no impact on our financial statements.

In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates on the disclosure requirements in the financial statements concerning obligations under certain guarantees. It also clarifies the requirements related to the recognition of liabilities by a guarantor at the inception

F-7

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

of certain guarantees. The disclosure requirements of this interpretation were effective for us on December 31, 2002. The adoption of this standard did not impact our financial statements.

FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46), as amended, an interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. FIN 46 requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the activities of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. FIN 46 applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. For variable interest entities created before February 1, 2003, FIN 46 is effective for the first period ending after December 15, 2003. At September 30, 2003, we do not have ownership in any variable interest entities. We will apply the consolidation requirements of FIN 46 in future periods should an interest in a variable interest entity be acquired.

In May 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 was effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on our financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” The statement requires that an issuer classify financial instruments that are within its scope as a liability. Many of those instruments were classified as equity under previous guidance. SFAS No. 150 was effective for all financial instruments entered into or modified after May 31, 2003. Otherwise, it was effective on July 1, 2003. The adoption of SFAS No. 150 did not have a material effect on our financial position or results of operations.

NOTE D—ASSET PURCHASE

On August 26, 2002, we acquired the egg products assets of Canadian Inovatech Inc. for approximately $18.0 million. The total purchase price was allocated to the acquired assets and liabilities based on their fair values at the acquisition date as determined by a third party appraisal firm. The allocation of the purchase price resulted in goodwill of $4.8 million. We also entered into long-term leases for two plants operated by the seller. This entity’s results of operations have been included in our operating results since the date of the asset purchase. Also, as a result of this asset purchase, we own 67%, rather than 33%, of a Canadian egg products joint venture, Trilogy Egg Products, Inc. Hence, Trilogy became a consolidated entity under our financial reporting as of the date of the asset purchase.

The following unaudited pro forma statement of earnings information has been prepared assuming the asset purchase had occurred on January 1, 2002. The net sales and earnings before income taxes for the nine months ended September 30, 2003 represent actual results for the period (dollars in thousands):

	Nine months ended September 30, 2003		Nine months ended September 30, 2002
Net sales	$	968,209	$	896,491
Earnings before income taxes		40,071		35,232

F-8

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

This unaudited pro forma information is not necessarily indicative of the combined results of operations that would have occurred had the transaction occurred on the noted date, nor is it indicative of the results which may occur in the future.

NOTE E—OPERATING SEGMENT HELD FOR SALE

On October 15, 2003, we completed the sale of our Dairy Products Division operating segment to Dean Foods Company for approximately $155 million. The Dairy Products Division is substantially made up of the assets of the Dairy LLC’s. The Dairy Products Division processes and sells ice milk and ice cream mixes, creamers, milk and specialty dairy products. In accordance with the transition services agreement, we will be compensated for certain transition services provided to the buyer for a period currently anticipated to be 12 to 18 months after the close of the transaction. These transition services include services such as information technology, sales, customer service and procurement. By providing these transition services, we are deemed to have “significant continuing involvement” in the Dairy Products Division operating segment. Therefore, we determined that the sale did not meet the accounting criteria for “discontinued operations”, but did meet the accounting criteria for classification as “held for sale.” Accordingly, the related assets and liabilities of the Dairy Products Division operating segment were classified as current assets and liabilities held for sale at September 30, 2003, and any related depreciation and amortization of the assets was stopped beginning in June 2003. The operations of the Dairy Products Division operating segment are included in the statement of earnings of the Company through September 30, 2003.

External net sales and earnings from the Dairy Products Division operating segment held for sale as of September 30, 2003 were as follows (dollars in thousands):

	Nine months ended September 30, 2003		Nine months ended September 30, 2002
External net sales	$	144,667	$	147,727
Earnings before income taxes		11,439		7,257

Assets and liabilities of the Dairy Products Division operating segment classified as held for sale in the Consolidated Balance Sheet as of September 30, 2003 are as follows (dollars in thousands):

	September 30, 2003
Assets
Accounts receivable, less allowances	$	12,720
Inventories		7,485
Property, plant and equipment, net		36,073
Other assets		2,631
	$	58,909
Liabilities
Accounts payable	$	6,559
Accrued liabilities		4,385
Deferred income taxes		(4,606	)
Non-controlling interest		475
	$	6,813

F-9

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

NOTE F—OTHER FINANCIAL STATEMENT DATA

Inventories

Inventories, other than flocks, are stated at the lower of cost (determined on a first-in, first-out basis) or market. Flock inventory represents the cost of purchasing and raising flocks to laying maturity, at which time their cost is amortized to operations over their expected useful life of generally one to two years, assuming no salvage value.

Inventories consisted of the following (dollars in thousands):

	September 30, 2003		December 31, 2002
Raw materials and supplies	$	15,024	$	18,552
Work in process and finished goods		54,345		54,574
Flocks		20,312		22,681
	$	89,681	$	95,807

Goodwill

The change in the carrying amount of goodwill for the period ended September 30, 2003 is as follows:

Balance at December 31, 2002	$	341,028
Reduction related to resolution of certain tax contingencies recorded at the date of the Merger		(3,171	)
Goodwill related to Dairy Division (see Note E)		(1,763	)
Balance at September 30, 2003	$	336,094

NOTE G—COMMITMENTS AND CONTINGENCIES

Potato Procurement Contract

We have a contract to purchase potatoes expiring in 2004 which will supply approximately 45% and 40% of the Potato Products Division’s raw material needs in 2003 and 2004, respectively, at an approximate cost of $5.3 million each year.

Egg Procurement Contracts

We maintain egg procurement contracts with numerous cooperatives and egg producers throughout the Midwestern and Eastern United States and Canada which supply approximately 50% of our egg requirements. Most of these contracts vary in length from 18 months to 7 years with prices primarily indexed to grain or Urner Barry egg market indices. No single egg supplier provides more than 10% of our egg requirements. Based upon the best estimates available to us for grain and egg prices, we project that our purchases from our top five long-term contracted egg suppliers will approximate $141 million in 2003, $138 million in 2004, $82 million in 2005, $20 million in 2006, and $16 million in 2007. The 2003 amount will account for approximately 60% of our contracted egg purchases this year.

Patent Litigation

We have an exclusive license agreement for a patented process for the production and sale of extended shelf-life liquid egg products. Under the license agreement, we have the right to defend and prosecute

F-10

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

infringement of the underlying patents. We may offset 50% of our costs of defending the patents against royalty payments due to the patent holder - North Carolina State University. The U.S. Federal Court of Appeals has upheld the validity of the patents on two separate occasions. In September 2000, the U.S. Patent and Trademark Office allowed product claims beyond the process claims previously allowed for the extended shelf-life egg product. These patents are scheduled to expire beginning in 2006.

In 2000, litigation was settled with one party related to the infringement of these patents and a sub-license was issued to the infringing party granting them the right to manufacture and distribute extended shelf-life liquid whole egg product subject to a royalty payable to us and the patent holder on all future product sold. In connection with this settlement, the patent holder received a lump sum payment for the past production and sale of the product and other matters related to the infringement.

We are continuing to pursue litigation related to other parties who we believe are infringing the product and process patents, including Rose Acre Farms, Inc. and Cutler Egg Products, Inc. The patent infringement trial with Sunny Fresh Foods, Inc., a subsidiary of Cargill, Inc., concluded with a jury verdict issued on August 12, 2003. The jury found the licensed patents to be valid and enforceable, but also found that Sunny Fresh Foods, Inc. did not infringe the patents. All post-trial motions were denied. We have filed an appeal.

Other Litigation

We are engaged in routine litigation incidental to our business. We believe the ultimate outcome of such litigation will not have a material effect on our consolidated financial position, liquidity or results of operations.

Other Matter

As of September 30, 2003, we have an approximate $3.7 million investment recorded for Belovo S.A. (Belovo), a Belgium egg products company, which represents our approximate 36% interest accounted for under the equity method. Earlier in 2003, Belovo notified the Belgium government of a potential finished products inventory contamination issue. Belovo is currently working with the Belgium government to resolve the status of inventory held in quarantine. The potential loss, if any, related to this matter has not been determined.

NOTE H—COMPREHENSIVE INCOME (LOSS)

The components of and changes in accumulated other comprehensive loss (AOCL), net of taxes, during the nine months ended September 30, 2003 were as follows (dollars in thousands):

	Cash Flow Hedges			Foreign Currency Translation		Total AOCL
Balance at December 31, 2002	$	(7,799	)	$	151	$	(7,648	)
Foreign currency translation adjustment		—			2,711		2,711
Net unrealized change on cash flow hedges		4,282			—		4,282
Balance at September 30, 2003	$	(3,517	)	$	2,862	$	(655	)

F-11

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Comprehensive income, net of taxes, for the nine months ended September 30, 2003 and 2002 was as follows (dollars in thousands):

Net income for the nine months ended September 30, 2003			$	24,515
Net gains arising during the period from cash flow hedges:
Net unrealized derivative gains during period	4,282
Foreign currency translation adjustment	2,711
Other comprehensive income				6,993
Comprehensive income for the nine months ended September 30, 2003			$	31,508
Net income for the nine months ended September 30, 2002			$	20,041
Net gains (losses) arising during the period from cash flow hedges:
Net unrealized derivative losses during period	(1,211	)
Foreign currency translation adjustment	326
Other comprehensive loss				(885	)
Comprehensive income for the nine months ended September 30, 2002			$	19,156

NOTE I—BUSINESS SEGMENTS

We operate in four reportable segments – Egg Products, Refrigerated Distribution, Dairy Products and Potato Products. See Note E regarding the sale of the Dairy Products Division operating segment. Certain financial information on our operating segments is as follows (unaudited, dollars in thousands):

	Company
	Egg Products		Refrigerated Distribution		Dairy Products		Potato Products		Corporate		Total
THREE MONTHS ENDED SEPTEMBER 30, 2003:
External net sales	$	207,796	$	67,750	$	51,789	$	18,730	N/A		$	346,065
Intersegment sales		4,810		—		26		922	N/A			5,758
Operating profit (loss)		18,537		3,655		5,358		2,685	(2,297	)		27,938
Depreciation and amortization		10,965		710		—		1,171	8			12,854
THREE MONTHS ENDED SEPTEMBER 30, 2002:
External net sales	$	165,944	$	58,409	$	51,425	$	18,176	N/A		$	293,954
Intersegment sales		3,030		—		—		932	N/A			3,962
Operating profit (loss)		17,718		3,748		2,305		3,120	(1,921	)		24,970
Depreciation and amortization		10,681		564		1,182		1,165	8			13,600
NINE MONTHS ENDED SEPTEMBER 30, 2003:
External net sales	$	575,570	$	193,029	$	144,667	$	54,943	N/A		$	968,209
Intersegment sales		11,643		—		88		2,688	N/A			14,419
Operating profit (loss)		51,119		12,557		11,918		6,268	(5,951	)		75,911
Depreciation and amortization		33,403		2,149		2,200		3,511	23			41,286
NINE MONTHS ENDED SEPTEMBER 30, 2002:
External net sales	$	483,018	$	178,617	$	147,727	$	52,774	N/A		$	862,136
Intersegment sales		8,803		—		—		2,555	N/A			11,358
Operating profit (loss)		52,712		8,306		7,914		7,551	(5,642	)		70,841
Depreciation and amortization		32,436		1,547		3,388		3,494	28			40,893

F-12

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

NOTE J—SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

On November 20, 2003, in connection with the merger transaction, we entered into a new $100 million revolving credit agreement, a $495 million term loan, a $135 million senior unsecured term loan facility and issued $150 million aggregate principal amount of senior subordinated notes all of which have been guaranteed, on a joint and several basis, by us and our wholly owned domestic subsidiaries.

The following condensed consolidating financial information presents our consolidated balance sheet as of September 30, 2003 and December 31, 2002 and the statements of operations for the three and nine month periods ended September 30, 2003 and 2002 and statements of cash flows for the nine month periods ended September 30, 2003 and 2002. These financial statements reflect Michael Foods, Inc. (the Parent), the wholly owned guarantor subsidiaries (on a combined basis), the non-wholly owned subsidiaries, and elimination entries necessary to reflect such entities on a consolidated basis. The assets and liabilities of the Dairy Products segment are presented in current assets held for sale and liabilities related to business to be sold (see Note E).

F-13

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Balance Sheets

September 30, 2003

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries				Eliminations			Consolidated
							M-Foods Dairy, LLC		M-Foods Dairy TXCT, LLC
Assets
Current assets
Cash and equivalents	$	27,278		$	(1,962	)	$	—	$	—	$	—		$	25,316
Accounts receivable, less allowances		129			106,767			7,642		5,078		(13,454	)		106,162
Inventories		—			89,681			4,024		3,461		(7,485	)		89,681
Prepaid expenses and other		374			10,547			388		67		(455	)		10,921
Assets held for sale		—			—			—		—		58,909			58,909
Total current assets		27,781			205,033			12,054		8,606		37,515			290,989
Property, plant and equipment, net		21			230,703			21,676		10,316		(31,991	)		230,725
Other assets
Goodwill		2,410			333,684			1,763		—		(1,763	)		336,094
Joint ventures and other assets		11,937			23,530			104		132		(2,653	)		33,050
Preferred return receivable for subsidiaries		—			27,302			—		—		(27,302	)		—
Investment in subsidiaries		609,132			—			—		—		(609,132	)		—
		623,479			384,516			1,867		132		(640,850	)		369,144
	$	651,281		$	820,252		$	35,597	$	19,054	$	(635,326	)	$	890,858
Liabilities and shareholder’s equity
Current liabilities
Current maturities of long-term debt	$	13,283		$	558		$	—	$	—	$	—		$	13,841
Accounts payable		196			67,471			3,004		3,555		(7,295	)		66,931
Accrued liabilities		41,011			68,017			2,944		1,441		(4,385	)		109,028
Liabilities related to business to be sold		—			—			—		—		6,813			6,813
Total current liabilities		54,490			136,046			5,948		4,996		(4,867	)		196,613
Long-term debt, less current maturities		386,807			41,477			—		—		—			428,284
Deferred income taxes		(1,325	)		56,452			—		—		—			55,127
Total liabilities		439,972			233,975			5,948		4,996		(4,867	)		680,024
Non-controlling interest		475			—			—		—		(475	)		—
Preferred unit holder return payable		—			—			20,301		7,001		(27,302	)		—
Shareholder’s equity		210,834			586,277			9,348		7,057		(602,682	)		210,834
	$	651,281		$	820,252		$	35,597	$	19,054	$	(635,326	)	$	890,858

F-14

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Balance Sheets

December 31, 2002

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations			Consolidated
						M-Foods Dairy, LLC		M-Foods Dairy TXCT, LLC
Assets
Current assets
Cash and equivalents	$	19,665		$	907	$	—	$	—	$	—		$	20,572
Accounts receivable, less allowances		314			90,108		7,836		4,399		(1,078	)		101,579
Inventories		—			88,376		3,412		4,019		—			95,807
Prepaid expenses and other		202			12,704		600		65		—			13,571
Total current assets		20,181			192,095		11,848		8,483		(1,078	)		231,529
Property, plant and equipment, net		44			252,825		18,104		11,380		—			282,353
Other assets
Goodwill		—			339,265		1,763		—		—			341,028
Joint ventures and other assets		15,362			22,082		139		529		—			38,112
Preferred return receivable for subsidiaries		—			17,170		—		—		(17,170	)		—
Investment in subsidiaries		639,819			—		—		—		(639,819	)		—
		655,181			378,517		1,902		529		(656,989	)		379,140
	$	675,406		$	823,437	$	31,854	$	20,392	$	(658,067	)	$	893,022
Liabilities and shareholder’s equity
Current liabilities
Current maturities of long-term debt	$	14,714		$	557	$	—	$	2,400	$	—		$	17,671
Accounts payable		426			60,933		2,836		2,873		(1,078	)		65,990
Accrued liabilities		35,372			49,953		2,352		1,046		—			88,723
Total current liabilities		50,512			111,443		5,188		6,319		(1,078	)		172,384
Long-term debt, less current maturities		448,734			44,984		—		—		—			493,718
Deferred income taxes		(3,641	)		50,760		—		—		—			47,119
Total liabilities		495,605			207,187		5,188		6,319		(1,078	)		713,221
Non-controlling interest		475			—		—		—		—			475
Preferred unit holder return payable		—			—		12,442		4,728		(17,170	)		—
Shareholder’s equity		179,326			616,250		14,224		9,345		(639,819	)		179,326
	$	675,406		$	823,437	$	31,854	$	20,392	$	(658,067	)	$	893,022

F-15

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Statements of Operations

Three months ended September 30, 2003

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations			Consolidated
						M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net sales	$	—		$	300,008	$	27,173		$	24,642		$	(5,758	)	$	346,065
Cost of sales		—			248,367		23,068			22,487			(7,022	)		286,900
Gross profit		—			51,641		4,105			2,155			1,264			59,165
Selling, general and administrative expenses		2,297			27,726		1,962			1,110			(1,868	)		31,227
Operating profit (loss)		(2,297	)		23,915		2,143			1,045			3,132			27,938
Interest expense, net		11,099			1,602		(676	)		(152	)		—			11,873
Other income		1,735			—		—			—			(1,735	)		—
Earnings (loss) before equity in earnings of subsidiaries and income taxes		(11,661	)		22,313		2,819			1,197			1,397			16,065
Equity in earnings of subsidiaries		16,967			4,016		(2,819	)		(1,197	)		(16,967	)		—
Earnings (loss) before income taxes		5,306			26,329		—			—			(15,570	)		16,065
Income tax expense (benefit)		(4,462	)		10,759		—			—			—			6,297
Net earnings (loss)		9,768			15,570		—			—			(15,570	)		9,768
Other comprehensive income (loss)
Foreign currency translation adjustment		—			16		—			—			—			16
Change in cash flow hedges		1,221			735		—			—			—			1,956
Comprehensive income (loss)	$	10,989		$	16,321	$	—		$	—		$	(15,570	)	$	11,740

F-16

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Statements of Operations

Three months ended September 30, 2002

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Eliminations			Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net sales	$	—		$	246,491		$	28,016		$	23,409		$	(3,962	)	$	293,954
Cost of sales		—			196,733			26,325			20,681			(3,962	)		239,777
Gross profit		—			49,758			1,691			2,728			—			54,177
Selling, general and administrative expenses		1,921			26,175			1,325			992			(1,206	)		29,207
Operating profit (loss)		(1,921	)		23,583			366			1,736			1,206			24,970
Interest expense, net		11,995			889			(29	)		(11	)		—			12,844
Other income		1,206			—			—			—			(1,206	)		—
Earnings (loss) before equity in earnings of subsidiaries and income taxes		(12,710	)		22,694			395			1,747			—			12,126
Equity in earnings of subsidiaries		15,776			2,142			(395	)		(1,747	)		(15,776	)		—
Earnings (loss) before income taxes		3,066			24,836			—			—			(15,776	)		12,126
Income tax expense (benefit)		(4,300	)		9,060			—			—			—			4,760
Net earnings (loss)		7,366			15,776			—			—			(15,776	)		7,366
Other comprehensive income (loss)
Foreign currency translation adjustment		—			(1,000	)		—			—			—			(1,000	)
Change in cash flow hedges		(2,511	)		1,562			—			—			—			(949	)
Comprehensive income (loss)	$	4,855		$	16,338		$	—		$	—		$	(15,776	)	$	5,417

F-17

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Statements of Operations

Nine months ended September 30, 2003

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations			Consolidated
						M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net sales	$	—		$	837,874	$	79,847		$	64,907		$	(14,419	)	$	968,209
Cost of sales		—			689,310		67,548			59,979			(16,084	)		800,753
Gross profit		—			148,564		12,299			4,928			1,665			167,456
Selling, general and administrative expenses		5,952			81,513		5,074			3,354			(4,348	)		91,545
Operating profit (loss)		(5,952	)		67,051		7,225			1,574			6,013			75,911
Interest expense, net		33,416			3,223		(634	)		(165	)		—			35,840
Other income		4,172			—		—			—			(4,172	)		—
Earnings (loss) before equity in earnings of subsidiaries and income taxes		(35,196	)		63,828		7,859			1,739			1,841			40,071
Equity in earnings of subsidiaries		46,198			9,598		(7,859	)		(1,739	)		(46,198	)		—
Earnings (loss) before income taxes		11,002			73,426		—			—			(44,357	)		40,071
Income tax expense (benefit)		(13,513	)		29,069		—			—			—			15,556
Net earnings (loss)		24,515			44,357		—			—			(44,357	)		24,515
Other comprehensive income (loss)
Foreign currency translation adjustment		—			2,711		—			—			—			2,711
Change in cash flow hedges		2,380			1,902		—			—			—			4,282
Comprehensive income (loss)	$	26,895		$	48,970	$	—		$	—		$	(44,357	)	$	31,508

F-18

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Statements of Operations

Nine months ended September 30, 2002

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations			Consolidated
						M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net sales	$	—		$	725,767	$	79,841		$	67,886		$	(11,358	)	$	862,136
Cost of sales		—			580,747		71,230			62,020			(11,358	)		702,639
Gross profit		—			145,020		8,611			5,866			—			159,497
Selling, general and administrative expenses		5,642			79,436		4,182			2,986			(3,590	)		88,656
Operating profit (loss)		(5,642	)		65,584		4,429			2,880			3,590			70,841
Interest expense, net		35,295			2,493		34			18			—			37,840
Other income		3,590			—		—			—			(3,590	)		—
Earnings (loss) before equity in earnings of subsidiaries and income taxes		(37,347	)		63,091		4,395			2,862			—			33,001
Equity in earnings of subsidiaries		43,438			7,257		(4,395	)		(2,862	)		(43,438	)		—
Earnings (loss) before income taxes		6,091			70,348		—			—			(43,438	)		33,001
Income tax expense (benefit)		(13,950	)		26,910		—			—			—			12,960
Net earnings (loss)		20,041			43,438		—			—			(43,438	)		20,041
Other comprehensive income (loss)
Foreign currency translation adjustment		—			326		—			—			—			326
Change in cash flow hedges		(5,218	)		4,007		—			—			—			(1,211	)
Comprehensive income (loss)	$	14,823		$	47,771	$	—		$	—		$	(43,438	)	$	19,156

F-19

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Statements of Cash Flows

Nine months ended September 30, 2003

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net cash provided by operating activities	$	36,251		$	46,411		$	10,293		$	5,424		$	98,379
Cash flows from investing activities:
Capital expenditures		—			(16,649	)		(5,417	)		(736	)		(22,802	)
Net cash used in investing activities		—			(16,649	)		(5,417	)		(736	)		(22,802	)
Cash flows from financing activities:
Payments on long-term debt		(67,965	)		(586	)		—			(2,400	)		(70,951	)
Distribution to preferred unit holders		—			7,164			(4,876	)		(2,288	)		—
Investment in subsidiaries		39,327			(39,327	)		—			—			—
Net cash used in financing activities		(28,638	)		(32,749	)		(4,876	)		(4,688	)		(70,951	)
Effect of exchange rate changes on cash		—			118			—			—			118
Net increase (decrease) in cash and equivalents		7,613			(2,869	)		—			—			4,744
Cash and equivalents at beginning of period		19,665			907			—			—			20,572
Cash and equivalents at end of period	$	27,278		$	(1,962	)	$	—		$	—		$	25,316

F-20

MICHAEL FOODS, INC.

(A wholly-owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(UNAUDITED)

Condensed Consolidating Statements of Cash Flows

Nine Months ended September 30, 2002

(Unaudited, dollars in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net cash provided by operating activities	$	31,229		$	37,684		$	5,243		$	4,421		$	78,577
Cash flows from investing activities:
Capital expenditures		—			(13,847	)		(3,760	)		(1,635	)		(19,242	)
Business acquisition		—			(17,593	)		—			—			(17,593	)
Investments in joint ventures and other assets		(156	)		2,642			(150	)		—			2,336
Net cash used in investing activities		(156	)		(28,798	)		(3,910	)		(1,635	)		(34,499	)
Cash flows from financing activities:
Proceeds from revolving line of credit		5,000			—			—			—			5,000
Payments on long-term debt		(17,641	)		(227	)		—			(2,400	)		(20,268	)
Capital contribution from parent		656			—			—			—			656
Distribution to preferred unit holders		—			1,719			(1,333	)		(386	)		—
Investment in subsidiaries		7,544			(7,544	)		—			—			—
Net cash used in financing activities		(4,441	)		(6,052	)		(1,333	)		(2,786	)		(14,612	)
Net increase in cash and equivalents		26,632			2,834			—			—			29,466
Cash and equivalents at beginning of period		33,947			(6,287	)		—			—			27,660
Cash and equivalents at end of period	$	60,579		$	(3,453	)	$	—		$	—		$	57,126

F-21

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

Report of Independent Accountants

BOARD OF DIRECTORS

MICHAEL FOODS, INC.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of shareholder’s equity and of cash flows present fairly, in all material respects, the financial position of Michael Foods, Inc. and its subsidiaries (the Company), a wholly owned subsidiary of M-Foods Holdings, Inc., at December 31, 2002, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The financial statements of the Company as of December 31, 2001 and for the nine months then ended were audited by other independent certified public accountants whose report, dated February 8, 2002, expressed an unqualified opinion on those statements.

The financial statements of Michael Foods, Inc. and subsidiaries (the Predecessor) for the three months ended March 31, 2001 and for the year ended December 31, 2000 were audited by other independent certified public accountants whose report, dated May 15, 2001, expressed an unqualified opinion on those statements.

As discussed in Note C to the financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” and Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” on January 1, 2002.

/s/ PricewaterhouseCoopers LLP

Minneapolis, Minnesota

February 18, 2003, except for Note K, as to which the date is November 20, 2003.

F-22

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

BOARD OF DIRECTORS

MICHAEL FOODS, INC.

We have audited the accompanying consolidated balance sheet of Michael Foods, Inc. and subsidiaries (a wholly-owned subsidiary of M-Foods Holdings, Inc.) as of December 31, 2001 and the related consolidated statements of earnings, shareholder’s equity, and cash flows for the nine months then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Michael Foods, Inc. and subsidiaries (a wholly-owned subsidiary of M-Foods Holdings, Inc.) as of December 31, 2001, and the results of its operations and its cash flows for the nine months then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Minneapolis, Minnesota

February 8, 2002

F-23

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

BOARD OF DIRECTORS

MICHAEL FOODS, INC.

We have audited the consolidated statements of operations, shareholder’s equity, and cash flows of Michael Foods, Inc. and subsidiaries (the Predecessor”) for the year ended December 31, 2000 and the three months ended March 31, 2001. These financial statements are the responsibility of the Predecessor’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Michael Foods, Inc. and subsidiaries for the year ended December 31, 2000 and for the three months ended March 31, 2001, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Minneapolis, Minnesota

May 15, 2001, (except for the third paragraph of “Recent Accounting Pronouncements” within Note C, as to which the date is February 18, 2003)

F-24

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2002			2001
ASSETS
CURRENT ASSETS
Cash and equivalents	$	20,572,000		$	27,660,000
Accounts receivable, less allowances		101,579,000			102,317,000
Inventories		95,807,000			78,941,000
Prepaid expenses and other		13,571,000			11,370,000
Total current assets		231,529,000			220,288,000
PROPERTY, PLANT AND EQUIPMENT
Land		3,873,000			3,873,000
Buildings and improvements		110,702,000			99,561,000
Machinery and equipment		259,501,000			226,759,000
		374,076,000			330,193,000
Less accumulated depreciation		91,723,000			39,039,000
		282,353,000			291,154,000
OTHER ASSETS
Goodwill		341,028,000			341,021,000
Joint ventures and other assets		38,112,000			44,670,000
		379,140,000			385,691,000
	$	893,022,000		$	897,133,000
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	17,671,000		$	12,962,000
Accounts payable		65,990,000			64,492,000
Accrued liabilities
Compensation		15,251,000			12,582,000
Insurance		7,855,000			8,191,000
Customer programs		26,484,000			21,996,000
Income taxes		7,403,000			9,853,000
Interest		9,336,000			10,619,000
Hedging derivative liability		11,001,000			4,186,000
Other		11,393,000			9,930,000
Total current liabilities		172,384,000			154,811,000
LONG-TERM DEBT, less current maturities		493,718,000			540,132,000
DEFERRED INCOME TAXES		47,119,000			48,725,000
COMMITMENTS AND CONTINGENCIES		—			—
NON-CONTROLLING INTEREST		475,000			475,000
SHAREHOLDER’S EQUITY
Common stock, $0.01 par value, 1,000 shares authorized, issued and outstanding		—			—
Additional paid-in capital		147,498,000			146,792,000
Retained earnings		39,476,000			9,815,000
Accumulated other comprehensive loss		(7,648,000	)		(3,617,000	)
		179,326,000			152,990,000
	$	893,022,000		$	897,133,000

The accompanying notes are an integral part of these financial statements.

F-25

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Company				Predecessor
	Year ended December 31, 2002		Nine Months ended December 31, 2001		Three Months ended March 31, 2001			Year ended December 31, 2000
Net sales	$	1,168,160,000	$	885,642,000	$	275,627,000		$	1,080,601,000
Cost of sales		953,333,000		734,008,000		227,707,000			889,138,000
Gross profit		214,827,000		151,634,000		47,920,000			191,463,000
Selling, general and administrative expenses		116,444,000		87,484,000		27,376,000			104,657,000
Transaction expenses		—		—		11,050,000			—
Operating profit		98,383,000		64,150,000		9,494,000			86,806,000
Interest expense, net		50,179,000		42,335,000		3,293,000			13,206,000
Earnings before other expense and income taxes		48,204,000		21,815,000		6,201,000			73,600,000
Other expense-early extinguishment of debt		—		—		15,513,000			—
Earnings (loss) before income taxes		48,204,000		21,815,000		(9,312,000	)		73,600,000
Income tax expense (benefit)		18,543,000		12,000,000		(3,659,000	)		28,890,000
NET EARNINGS (LOSS)	$	29,661,000	$	9,815,000	$	(5,653,000	)	$	44,710,000

The accompanying notes are an integral part of these financial statements.

F-26

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY

	COMMON STOCK					ADDITIONAL PAID-IN CAPITAL			RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			TOTAL SHAREHOLDER’S EQUITY
	SHARES ISSUED		AMOUNT
Predecessor
Balance at January 1, 2000	20,301,624		$	203,000		$	102,777,000		$	162,577,000		$	(958,000	)	$	264,599,000
Repurchase of common stock	(2,109,400	)		(21,000	)		(46,104,000	)		—			—			(46,125,000	)
Incentive plan stock compensation	40,890			—			876,000			—			—			876,000
Stock options exercised, net of shares surrendered for exercise price and income taxes	56,370			1,000			650,000			—			—			651,000
Tax benefit from stock options exercised	—			—			307,000			—			—			307,000
Net earnings	—			—			—			44,710,000			—			—
Foreign currency translation adjustment loss	—			—			—			—			(359,000	)		—
Comprehensive income	—			—			—			—			—			44,351,000
Dividends ($.31 per share)	—			—			—			(5,926,000	)		—			(5,926,000	)
Balance at December 31, 2000	18,289,484			183,000			58,506,000			201,361,000			(1,317,000	)		258,733,000
Incentive plan stock compensation	39,703			—			1,169,000			—			—			1,169,000
Stock options exercised, net of shares surrendered for exercise price and income taxes	36,543			1,000			545,000			—			—			546,000
Tax benefit from stock options exercised	—			—			4,055,000			—			—			4,055,000
Stock options extended	—			—			310,000			—			—			310,000
Net loss	—			—			—			(5,653,000	)		—			—
Foreign currency translation adjustment income	—			—			—			—			1,088,000			—
Futures loss	—			—			—			—			(1,632,000	)		—
Comprehensive income (loss)	—			—			—			—			—			(6,197,000	)
Dividends ($.08 per share)	—			—			—			(1,465,000	)		—			(1,465,000	)
Balance at March 31, 2001	18,365,730		$	184,000		$	64,585,000		$	194,243,000		$	(1,861,000	)	$	257,151,000
Company
Balance at March 31, 2001	18,365,730		$	184,000		$	64,585,000		$	194,243,000		$	(1,861,000	)	$	257,151,000
Merger with M-Foods Holdings, Inc.	(18,365,730	)		(184,000	)		(64,585,000	)		(194,243,000	)		1,861,000			(257,151,000	)
Proceeds from issuance of common stock, $0.01 par	1,000			—			213,393,000			—			—			213,393,000
Deemed dividend to continuing shareholders	—			—			(66,631,000	)		—			—			(66,631,000	)
Allocation of deemed dividend to accumulated other comprehensive loss	—			—			—			—			(577,000	)		(577,000	)
Balance at April 1, 2001	1,000			—			146,762,000			—			(577,000	)		146,185,000
Additional capital invested by parent	—			—			30,000			—			—			30,000
Net earnings	—			—			—			9,815,000			—			—
Foreign currency translation adjustment income	—			—			—			—			10,000			—
Interest rate swap	—			—			—			—			(1,206,000	)		—
Futures loss	—			—			—			—			(1,844,000	)		—
Comprehensive income	—			—			—			—			—			6,775,000
Balance at December 31, 2001	1,000			—			146,792,000			9,815,000			(3,617,000	)		152,990,000
Additional capital invested by parent	—			—			706,000			—			—			706,000
Net earnings	—			—			—			29,661,000			—			—
Foreign currency translation adjustment income	—			—			—			—			141,000			—
Interest rate swap	—			—			—			—			(5,384,000	)		—
Futures gain	—			—			—			—			1,212,000			—
Comprehensive income	—			—			—			—			—			25,630,000
Balance at December 31, 2002	1,000		$	—		$	147,498,000		$	39,476,000		$	(7,648,000	)	$	179,326,000

The accompanying notes are an integral part of these financial statements.

F-27

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Company						Predecessor
	Year ended December 31, 2002			Nine months ended December 31, 2001			Three months ended March 31, 2001			Year ended December 31, 2000
Cash flows from operating activities:
Net earnings (loss)	$	29,661,000		$	9,815,000		$	(5,653,000	)	$	44,710,000
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation		53,543,000			39,689,000			11,114,000			42,355,000
Amortization of intangibles		716,000			7,256,000			1,421,000			5,628,000
Amortization of deferred financing costs		4,218,000			2,359,000			—			—
Deferred income taxes		(1,606,000	)		(2,749,000	)		(1,547,000	)		2,707,000
Tax benefit from stock options exercised		—			—			4,055,000			307,000
Changes in operating assets and liabilities:
Accounts receivable		1,648,000			18,569,000			(7,903,000	)		(20,274,000	)
Inventories		(10,630,000	)		3,400,000			(4,944,000	)		(4,537,000	)
Prepaid expenses and other		(1,902,000	)		(3,784,000	)		293,000			(199,000	)
Accounts payable		560,000			4,837,000			5,443,000			7,203,000
Accrued liabilities		6,797,000			21,401,000			11,737,000			(8,815,000	)
Net cash provided by operating activities		83,005,000			100,793,000			14,016,000			69,085,000
Cash flows from investing activities:
Capital expenditures		(27,394,000	)		(23,299,000	)		(10,837,000	)		(37,373,000	)
Business acquisitions		(17,883,000	)		(626,925,000	)		—			—
Joint ventures and other assets		4,752,000			(4,953,000	)		3,888,000			(1,127,000	)
Net cash used in investing activities		(40,525,000	)		(655,177,000	)		(6,949,000	)		(38,500,000	)
Cash flows from financing activities:
Payments on revolving line of credit		(30,000,000	)		(65,750,000	)		(52,000,000	)		(168,400,000	)
Proceeds from revolving line of credit		25,000,000			53,800,000			45,500,000			191,600,000
Payments on long-term debt		(45,274,000	)		(155,106,000	)		(109,000	)		(3,109,000	)
Proceeds from long-term debt		—			570,000,000			—			184,000
Repurchase of common stock		—			—			—			(46,125,000	)
Proceeds from issuance of common stock		—			174,800,000			546,000			651,000
Additional capital invested by parent		706,000			30,000			—			—
Dividends		—			—			(1,465,000	)		(5,926,000	)
Other		—			—			310,000			—
Net cash provided by (used in) financing activities		(49,568,000	)		577,774,000			(7,218,000	)		(31,125,000	)
Net increase (decrease) in cash and equivalents		(7,088,000	)		23,390,000			(151,000	)		(540,000	)
Cash and equivalents at beginning of period		27,660,000			4,270,000			4,421,000			4,961,000
Cash and equivalents at end of period	$	20,572,000		$	27,660,000		$	4,270,000		$	4,421,000
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	46,959,000		$	28,866,000		$	5,945,000		$	13,484,000
Income taxes		15,098,000			7,467,000			1,025,000			27,225,000

The accompanying notes are an integral part of these financial statements.

F-28

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A—MERGER AGREEMENT

On April 10, 2001, Michael Foods, Inc. and its subsidiaries (“Michael Foods,” “Company,” “we,” “us,” “our”) was acquired in a transaction (the “Merger”) led by an investor group comprised of a management group led by Michael Foods’ Chairman, President and Chief Executive Officer, Gregg Ostrander, affiliates of Jeffrey Michael, a member of the Predecessor’s Board of Directors, and affiliates of two private equity investment firms, Vestar Capital Partners and Goldner Hawn Johnson & Morrison Incorporated, (collectively, “M-Foods Investors, LLC”). Michael Foods, Inc. is a wholly-owned subsidiary of M-Foods Holdings, Inc.; M-Foods Holdings, Inc. is a wholly-owned subsidiary of M-Foods Investors, LLC. Under the terms of the Merger agreement, all outstanding shares of Michael Foods common stock were converted into the right to receive $30.10 per share in cash, or value equal thereto, and all outstanding stock options were converted into the right to receive, in cash, $30.10 per share reduced by the exercise price per share for all shares subject to such stock options. The purchase of the outstanding shares was financed through new equity financing of approximately $175,000,000, a senior secured credit facility of up to $470,000,000 at market-based variable interest rates, and $200,000,000 of senior subordinated notes at an 11.75% annual interest rate. As a result of the Merger, the stock of pre-merger Michael Foods (“Predecessor”) is no longer publicly traded and, therefore, earnings per share calculations are no longer included for financial statement presentation.

Immediately after the close of the Merger, we contributed the assets of our dairy products division into two limited liability corporations, M-Foods Dairy, LLC and M-Foods Dairy TXCT, LLC (collectively, the “Dairy LLCs”) and in exchange received voting preferred and voting common units from these entities equal to the fair value of the net assets contributed, which collectively were approximately $35,800,000. The preferred units issued to us have an annual 10% preferred return guarantee and represent 100% of the preferred units issued and outstanding. In addition, we received 5% of the common units issued by the Dairy LLCs, with the common units held by the Company representing 100% of the voting common units issued and outstanding. These common units have a stated value of $25,000. The remaining 95% of the common units, which are non-voting, are owned by M-Foods Dairy Holdings, LLC, which is owned by the same owners or affiliates of such owners, in the same proportion, as the unit holders of M-Foods Investors, LLC. The common unit interests owned by M-Foods Dairy Holdings, LLC were issued in exchange for $475,000 and are reflected as non-controlling interest in the accompanying consolidated balance sheet.

The Merger was accounted for as a purchase in accordance with Accounting Principles Board Opinion 16, Business Combinations and EITF 88-16, Basis in Leveraged Buyout Transactions. Accordingly, the acquired assets and liabilities have been recorded at fair value for the interests acquired by new investors and at the carryover basis for continuing investors. As a result, the assets and liabilities were assigned new values, which are part Predecessor cost and part fair value in the same proportions as the carryover basis of the residual interests retained by the continuing management investors and continuing affiliate investors of the Michael family, and the new interests acquired by the new investors. The amount of carryover basis was reflected as a deemed dividend of $66,631,000.

For ease of presentation, the Merger was accounted for as if it had occurred on April 1, 2001. Management determined that results of operations were not significant and no material transactions occurred during the period from April 1 through April 9, 2001. Our consolidated financial statements have been presented on a comparative basis with the Predecessor’s historical consolidated financial statements prior to the date of Merger. Different bases of accounting have been used to prepare the Company and Predecessor consolidated financial statements.

The primary differences relate to additional interest expense for new debt and depreciation and amortization of fixed assets and other intangible assets recorded at fair value at the date of Merger.

F-29

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

For accounting purposes, the Merger was considered a leveraged buy-out. The total purchase price of approximately $562,881,000 was allocated to the acquired assets and assumed liabilities based on their fair values at April 1, 2001, net of the deemed dividend of $66,631,000. These allocations were based on a valuation by a third party appraisal firm. The allocation of the purchase price was as follows:

Working capital	$	88,663,000
Property, plant & equipment		307,544,000
Other assets		42,816,000
Goodwill		347,537,000
Long-term debt		588,426,000
Other liabilities		51,474,000

In connection with the Merger, the Predecessor incurred transaction expenses of approximately $26,600,000 associated with the Merger and change-in-control provisions of various compensation, debt and other agreements, which have been reflected in the Predecessor financial statements. These transaction expenses include the expense related to the early extinguishment of debt resulting from the change-in-control. In addition, we incurred other merger related and debt issuance costs of approximately $40,000,000, which have been capitalized as direct costs of the Merger and deferred financing costs in our consolidated balance sheet.

The following unaudited pro forma net sales and earnings before other expense and income taxes for the year ended December 31, 2001 are derived from the application of pro forma adjustments to the Predecessor’s historical statement of earnings, and assume the Merger had occurred on January 1, 2001. The pro forma earnings for the year ended December 31, 2001 are also adjusted for goodwill amortization determined in accordance with the provisions of SFAS 142 (see Note C, Goodwill and Intangibles). The net sales and earnings before other expense and income taxes for the year ended December 31, 2002 represent actual results for the period.

	Year ended December 31, 2002		Year ended December 31, 2001
Net sales	$	1,168,160,000	$	1,161,269,000
Earnings before other expense and income taxes		48,204,000		19,446,000

The most significant of the pro forma adjustments reflected in the above amounts were to reverse the impact of the one-time transaction-related charges recorded during the three months ended March 31, 2001, to record the incremental interest on the additional debt incurred in connection with the Merger and to record additional depreciation and amortization charges resulting from the fair value adjustments made to fixed assets and the recording of additional intangible assets. The pro forma financial information should be read in conjunction with the related historical information and is not necessarily indicative of the results that would have been obtained had the transaction actually taken place at the beginning of the periods presented.

NOTE B—ASSET PURCHASE

On August 26, 2002, we acquired the egg products assets of Canadian Inovatech Inc. for approximately $18,000,000. The total purchase price was allocated to the acquired assets and liabilities based on their fair values at the acquisition date as determined by a third party appraisal firm. The allocation of the purchase price resulted in goodwill of $4,807,000. We also entered into long-term leases for two plants operated by the seller. This entity’s results of operations have been included in our operating results since the date of the asset purchase.

F-30

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Also, as a result of this asset purchase, we now own 67%, rather than 33%, of a Canadian egg products joint venture—Trilogy Egg Products, Inc. Hence, Trilogy became a consolidated entity under our financial reporting as of the date of the asset purchase.

The following unaudited pro forma statement of earnings information has been prepared assuming the asset purchase and the merger transaction described in Note A had occurred on January 1, 2001:

	Year ended December 31, 2002		Year ended December 31, 2001
Net sales	$	1,202,515,000	$	1,197,509,000
Earnings before other expense and income taxes		50,434,000		22,447,000

This unaudited pro forma information is not necessarily indicative of the combined results of operations that would have occurred had the transactions occurred on the noted dates, nor is it indicative of the results which may occur in the future.

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

The Company is a diversified producer and distributor of food products in four areas—egg products, refrigerated distribution, dairy products, and potato products. The Company believes it is the largest producer of processed egg products in the United States, and is a leading producer and distributor of specialty potato and dairy products to the foodservice, retail and industrial markets. The Company also distributes refrigerated food items, primarily cheese and other dairy items, to the retail food market in the central United States.

The Company adopted the accounting policies of the Predecessor.

Principles of Consolidation and Fiscal Year

The consolidated financial statements include the accounts of Michael Foods, Inc. and all majority owned subsidiaries in which it has control. All significant inter-company accounts and transactions have been eliminated. The Company’s investments in non-controlled entities in which it has the ability to exercise significant influence over operating and financial policies are accounted for by the equity method. The Company utilizes a fifty-two, fifty-three week fiscal year ending on the Saturday nearest to December 31, but for clarity of presentation, describes all periods as if the year end is December 31. The years ended December 31, 2002, 2001 and 2000 each consisted of fifty-two weeks.

Basis of Presentation

The accompanying consolidated financial statements as of December 31, 2000 and for the year then ended and for the three months ended March 31, 2001 have been taken from the historical books and records of the Predecessor.

Use of Estimates

Preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that

F-31

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

affect reported amounts of assets and liabilities, related revenues and expenses and disclosure about contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates used by management.

Cash and Equivalents

The Company considers all highly liquid temporary investments with original maturities of three months or less to be cash equivalents. Substantially all of the Company’s cash and equivalents is with one bank.

Accounts Receivable

The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support amounts due. Management performs on-going credit evaluations of customers. The Company maintains an allowance for potential credit losses which, when realized, have been within management’s expectations. The allowance was $3,110,000 and $2,650,000 at December 31, 2002 and 2001.

Inventories

Inventories, other than flocks, are stated at the lower of cost (determined on a first-in, first-out basis) or market. Flock inventory represents the cost of purchasing and raising flocks to laying maturity, at which time their cost is amortized to operations over their expected useful lives of generally one to two years.

Inventories consisted of the following at December 31:

	2002		2001
Raw materials and supplies	$	18,552,000	$	15,347,000
Work in process and finished goods		54,574,000		43,027,000
Flocks		22,681,000		20,567,000
	$	95,807,000	$	78,941,000

Accounting for Hedge Activities

Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. This standard establishes accounting and reporting standards for derivative financial instruments and hedge activities. Certain of the Company’s operating segments hold derivative instruments, such as corn, soybean meal, cheese and fuel futures that the Company believes provide an economic hedge of future transactions and are designated as cash flow hedges. As the commodities being hedged are either grain ingredients fed to the Company’s flocks, raw materials or production inputs, the changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of these items. In addition, the Company has also entered into interest rate swap agreements, which correspond with the interest payment terms of a portion of the Company’s variable rate senior secured credit facility. As the significant components of the swap agreements and the credit facility are highly correlative, the Company expects the swaps to be highly effective over the terms of the agreements. The amount of hedge ineffectiveness was immaterial for the years ended December 31, 2002 and 2001.

F-32

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

The Company actively monitors its exposure to commodity price risks and uses derivative commodity instruments to manage the impact of certain of these risks. The Company uses derivatives, primarily futures contracts, only for the purpose of managing risks associated with underlying exposures. The Company’s futures contracts are cash flow hedges of firm purchase commitments and anticipated production requirements, as they reduce the Company’s exposure to changes in the cash price of the respective items and generally extend for less than one year.

The Company does not trade or use instruments with the objective of earning financial gains on the commodity price, nor does it use instruments where there are not underlying exposures. Gains and losses on futures contracts are deferred as a component of Accumulated Other Comprehensive Loss (“AOCL”) in the Company’s equity section of the balance sheet and a corresponding amount is recorded in other current assets or liabilities, as appropriate. The amounts deferred are subsequently recognized in cost of sales when the associated products are sold. The cost or benefit of contracts closed prior to the execution of the underlying purchase is deferred until the anticipated purchase occurs. As a result of the volatility of the markets, deferred gains and losses in AOCL may fluctuate until the related contract is closed.

Initially, upon adoption of the new derivative accounting standard, and prospectively as required by the standard on the date new derivatives are entered into, the Company formally documents all relationships between hedging instruments and hedged items, as well as the Company’s risk management objectives and strategy for undertaking the hedge. This process includes specific identification of the hedging instrument and the hedge transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness will be assessed. Both at the inception of the hedge and on an ongoing basis, the Company assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. If it is determined that a derivative ceases to be a highly effective hedge or the forecasted transaction being hedged will no longer occur, the Company will discontinue hedge accounting, and any gains or losses on the derivative instrument will be recognized in earnings during the period in which it no longer qualifies as a hedge. No such instances occurred in the years ended December 31, 2002 or 2001.

Property, Plant and Equipment

Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on the straight-line basis. Estimated service lives range from 10-40 years for buildings and improvements and 3-10 years for machinery and equipment. Accelerated and straight-line methods are used for income tax purposes. The Company and Predecessor capitalized interest costs relating to the construction and installation of property, plant and equipment of $196,000 and $224,000 for the nine months ended December 31, 2001 and the year ended December 31, 2000, respectively. No interest was capitalized by the predecessor during the three months ended March 31, 2001 or by the Company for the year ended December 31, 2002.

Goodwill and Intangible Assets

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SAFS No. 142, “Goodwill and Other Intangible Assets.” SFAS 141 eliminates the pooling-of-interests method of accounting for business combinations, requiring that all business combinations initiated after June 30, 2001 be accounted for using the purchase method. SFAS 142 provides that goodwill is no longer amortized, but rather is reviewed for impairment at least annually and more frequently in certain circumstances using a two-step process.

F-33

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment of Disposal of Long-Lived Assets.” This statement addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of and supercedes SFAS 121. SFAS 144 does, however, retain the fundamental provisions of SFAS 121 for the recognition and measurement of the impairment of long-lived assets to be held and used and the measurement of long-lived assets to be disposed of by sale.

As of January 1, 2002, we adopted SFAS 141, 142 and 144. The effect of adopting SFAS 142 was to reduce amortization expense by approximately $8,824,000 for the year ended December 31, 2002. As a result of adopting these standards, our accounting policies for goodwill and intangible assets changed effective January 1, 2002, as described below:

Goodwill and Intangible Assets with Indefinite Lives

We recognize the excess cost of an acquired entity over the net amount assigned to assets acquired, including intangible assets with indefinite lives, and liabilities assumed, as goodwill. Goodwill and intangible assets with indefinite lives will be tested for impairment on an annual basis and between annual tests whenever there is an impairment indicated. Impairment losses will be recognized whenever the implied fair value is less than the carrying value of the related asset. Prior to January 1, 2002, goodwill and intangible assets with indefinite lives were amortized over 40 years. Beginning January 1, 2002, goodwill and intangible assets with indefinite lives are no longer amortized.

Other Intangibles

We recognize an acquired intangible asset apart from goodwill whenever the asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract, asset, or liability. An intangible asset other than goodwill is amortized over its estimated useful life unless that life is determined to be indefinite. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value.

The adoption of SFAS 141 and 144 did not affect our financial position or results of operations. During the second quarter of 2002 pursuant to SFAS 142, we completed the transitional impairment test of goodwill with no impairment indicated at January 1, 2002. During the fourth quarter of 2002, pursuant to SFAS 142, we completed the annual impairment test of goodwill with no impairment indicated.

The change in the carrying amount of goodwill for the year ended December 31, 2002 is as follows:

Balance at December 31, 2001	$	341,021,000
Goodwill related to the Inovatech acquisition (see Note B)		4,807,000
Reduction related to resolution of certain tax contingencies recorded at the date of the Merger		(4,800,000	)
Balance at December 31, 2002	$	341,028,000

F-34

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Each segment’s share of this goodwill was as follows:

	2002		2001
Egg Products	$	254,189,000	$	254,182,000
Refrigerated Distribution		35,560,000		35,560,000
Potato Products		49,516,000		49,516,000
Dairy Products		1,763,000		1,763,000

The following table presents a reconciliation of net earnings (loss), as reported in the financial statements, to those amounts adjusted for goodwill and intangible amortization determined in accordance with the provisions of SFAS 142.

	Year ended December 31, 2002		Nine months ended December 31, 2001		Three months ended March 31, 2001
	(Company)				(Predecessor)
Reported net earnings (loss)	$	29,661,000	$	9,815,000	$	(5,653,000	)
Add back: goodwill amortization		—		6,516,000		885,000
Adjusted net earnings (loss)	$	29,661,000	$	16,331,000	$	(4,768,000	)

The carrying amount for other indefinite-lived intangible assets (trademarks) as of December 31, 2002 and 2001 was $13,406,000. The Predecessor had no indefinite-lived intangible assets.

Our acquired intangible assets that have been determined to have a definite life and continue to be amortized as of December 31, 2002 are as follows:

	Gross Carrying Amount		Accumulated Amortization
Licenses and non-compete	$	2,526,000	$	(1,353,000	)

The aggregate amortization expense for the year ended December 31, 2002 was approximately $716,000 and $637,000 for the nine months ended December 31, 2001. The Predecessor had amortization expense of approximately $500,000 during the three months ended March 31, 2001. The estimated amortization expense for the years ended December 31, 2003 through December 31, 2006 is as follows:

2003	$	715,000
2004		186,000
2005		186,000
2006		86,000

Deferred Financing Costs

In connection with the Merger financing, deferred financing costs of $21,035,000 were capitalized. These costs are included in other assets and are being amortized using the interest method over the lives of the respective debt agreements. Accumulated amortization was $6,473,000 and $2,359,000 at December 31, 2002 and 2001 respectively.

F-35

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Foreign Joint Ventures and Currency Translation

The Company has invested in foreign joint ventures in Europe and Canada related to its egg products division. The European joint venture investment is accounted for using the equity method of accounting. The financial statements for this entity are measured in their local currency and then translated into U.S. dollars. The balance sheet accounts are translated using the current exchange rate at the balance sheet date and the operating results are translated using the average rates prevailing throughout the reporting period. Accumulated translation gains or losses are recorded in AOCL and are included as a component of comprehensive income (loss). The Company now owns 67% of the Canadian joint venture and therefore its financial statements are included in the consolidated financial statements of the Company. The financial statements of the Canadian joint venture are translated using the same methodology as used for the European joint venture with the accumulated translation gains or losses being recorded in AOCL and are included as a component of comprehensive income (loss).

Revenue Recognition

Sales are recognized when goods are shipped to customers and are recorded net of estimated customer programs and returns.

Stock-Based Compensation

The Predecessor utilized the intrinsic value method of accounting for its stock-based employee compensation plans. Pro forma information related to the fair value method of accounting is provided in Note I. The Company does not have any stock-based compensation plans.

Recent Accounting Pronouncements

On January 1, 2002, we adopted Emerging Issues Task Force (EITF) Issue No. 00-25, Vendor Income Statement Characterization of Consideration to a Reseller on the Vendors Products, effective January 1, 2002. The adoption of EITF Issue 00-25 did not have a material effect on our consolidated financial statements. In addition, we adopted EITF Issue No. 01-09, Accounting for Consideration given by a Vendor to a Customer (including a Reseller of the Vendor’s Products), effective January 1, 2002. The adoption of EITF Issue No. 01-09 did not have a material effect on our consolidated financial statements.

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations” which provides accounting requirements for retirement obligations associated with tangible long-lived assets. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material effect on our consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statement 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. SFAS No. 145 rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” Under SFAS No. 4, all gains and losses from extinguishment of debt were required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. SFAS No. 145 requires that gains and losses from extinguishment of debt be classified as an extraordinary item only if they are part of the entities recurring operations and not unusual or infrequent. The effect of adopting this standard on our financial statements was to reclassify our extraordinary loss in the three-month period ended March 31, 2001 to other expense in the statement of operations.

F-36

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

In June 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. Prior to the adoption of this Standard, a liability for an exit cost, as defined by Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring),” was recognized at the date of an entity’s commitment to an exit plan. SFAS No. 146 was effective for the Company for exit plans or disposal activities initiated after December 31, 2002. Adoption is not expected to have a material impact on our financial position or results of operations.

In November 2002, the FASB issued Interpretation No. 45, “ Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates on the disclosure requirements in the financial statements concerning obligations under certain guarantees. It also clarifies the requirements related to the recognition of liabilities by a guarantor at the inception of certain guarantees. The disclosure requirements of this interpretation were effective for us on December 31, 2002 but did not require any additional disclosure. The recognition provisions of the interpretation are applicable only to guarantees issued or modified after December 31, 2002. Effective January 1, 2003, we adopted the provisions of SFAS 146, which had no impact on our financial statements.

FASB issued FASB Interpretation No. 46. “Consolidation of Variable Interest Entities” (FIN 46), as amended, an interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. FIN 46 requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the activities of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. FIN 46 applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. For variable interest entities created before February 1, 2003, FIN 46 is effective for the first period ending after December 15, 2003. At September 30, 2003, we do not have ownership in any variable interest entities. We will apply the consolidation requirements of FIN 46 in future periods should an interest in a variable interest entity be acquired.

Advertising

Advertising costs are expensed as incurred. Advertising expense was $8,973,000 for the year ended December 31, 2002 and $3,779,000 during the nine months ended December 31, 2001. The Predecessor incurred advertising expense of $3,011,000 during the three months ended March 31, 2001 and $9,132,000 for the year ended December 31, 2000.

NOTE D—LONG-TERM DEBT

Long-term debt consisted of the following on December 31:

	2002		2001
Revolving lines of credit	$	—	$	5,000,000
Senior notes payable		300,305,000		342,650,000
Subordinated notes payable		200,000,000		200,000,000
Other		11,084,000		5,444,000
		511,389,000		553,094,000
Less current maturities		17,671,000		12,962,000
	$	493,718,000	$	540,132,000

F-37

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Concurrent with the Merger, the Company entered into a new senior credit agreement, which consists of a $100,000,000 revolving credit facility, a $100,000,000 senior term loan A, both of which are due April 2007, and a $270,000,000 senior term loan B due April 2008. The Company’s senior credit facility bears interest at a floating base rate plus an applicable margin, as defined in the agreement (effective rate of 6.8% at December 31, 2002). In addition, the Company also issued $200,000,000 of 11.75% senior subordinated notes due April 2011, which are subordinated to the senior credit agreement.

The revolving credit and senior term loans are collateralized by substantially all of the assets of the Company. The revolving credit loan, the A and B term loans and senior subordinated notes contain restrictive covenants, including restrictions on dividends and distributions to shareholders and unit holders, a minimum fixed charge coverage ratio, a maximum leverage ratio, and a minimum interest coverage ratio, in addition to limitations on additional indebtedness and liens. Covenants related to operating performance are primarily based on earnings before income tax, interest expense and depreciation and amortization expense. In addition, the revolving credit, A and B term loans and senior subordinated note agreements also include guarantees by substantially all of the Company’s domestic subsidiaries. The fair value of the Company’s long-term debt at December 31, 2002 approximated the carrying value.

Aggregate maturities of the Company’s long-term debt are as follows:

Years Ending December 31,
2003	$	17,671,000
2004		14,699,000
2005		18,401,000
2006		23,356,000
2007		175,193,000
Thereafter		262,069,000
	$	511,389,000

NOTE E—INCOME TAXES

The Merger was accomplished through a cash-for-stock transaction. As a result, the basis of the Company’s assets and liabilities did not change for income tax reporting purposes. Goodwill arising through the Merger is not deductible. A portion of Predecessor goodwill, which was deductible for tax purposes prior to the Merger, will continue to be deductible.

The taxable income or loss of the Dairy LLCs will be distributed primarily to the Company until it has received payment for its preferred units and a 10% cumulative return on the preferred units, and all senior and subordinated debt has been retired.

F-38

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Income tax expense (benefit) consists of the following:

	Company						Predecessor
	Year ended December 31, 2002			Nine months ended December 31, 2001			Three months ended March 31, 2001			Year ended December 31, 2000
Current:
Federal	$	17,579,000		$	10,998,000		$	3,100,000		$	23,447,000
Foreign		266,000			—			—			—
State		2,304,000			1,792,000			877,000			2,736,000
		20,149,000			12,790,000			3,977,000			26,183,000
Deferred:
Federal		(1,456,000	)		(720,000	)		(1,406,000	)		2,461,000
State		(150,000	)		(70,000	)		(141,000	)		246,000
		(1,606,000	)		(790,000	)		(1,547,000	)		2,707,000
	$	18,543,000		$	12,000,000		$	2,430,000		$	28,890,000

The net deferred tax liability associated with the cumulative temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes are as follows:

	December 31,
	2002			2001
Depreciation	$	41,301,000		$	43,120,000
Flock inventories		6,008,000			5,730,000
Goodwill		3,830,000			3,150,000
Trademarks		4,970,000			4,980,000
Non-compete agreement		(3,404,000	)		(3,390,000	)
Other		(5,586,000	)		(4,865,000	)
	$	47,119,000		$	48,725,000

The following is a reconciliation of the federal statutory income tax rate to the consolidated effective tax rate:

	Company				Predecessor
	Year ended December 31, 2002		Nine Months ended December 31, 2001		Three Months ended March 31, 2001		Year ended December 31, 2000
Federal statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
State taxes	2.9		5.1		1.9		2.6
Goodwill	—		10.2		3.4		1.2
Other	0.6		4.7		(1.0	)	0.5
	38.5	%	55.0	%	39.3	%	39.3	%

F-39

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

NOTE F—EMPLOYEE RETIREMENT PLAN

Full-time employees who meet certain service requirements are eligible to participate in a defined contribution retirement plan. The Company matches up to 4% of each participant’s eligible compensation. Company contributions for the year ended December 31, 2002 were $2,699,000 and for the nine months ended December 31, 2001 were $1,964,000. Predecessor contributions totaled $1,194,000 for the three months ended March 31, 2001 and $2,692,000 in the year ended December 31, 2000.

The Company also contributes funds to two union retirement plans which totaled $139,000 for the year ended 2002 and $101,000 for the nine months ended December 31, 2001. Predecessor contributions to the two union plans totaled $34,000 for the three months ended March 31, 2001 and $163,000 for the year ended December 31, 2000.

NOTE G—RELATED PARTY TRANSACTIONS

Pursuant to management agreements with Vestar and Goldner Hawn Johnson and Morrison, the Company pays them a combined annual fee of $1,000,000 or .75% of consolidated earnings before interest, taxes, depreciation and amortization, whichever is greater. The management fee for the year ended December 31, 2002 was $1,166,000 and for the nine month period ended December 31, 2001 was approximately $800,000.

In February 1997, the Predecessor acquired Papetti’s Hygrade Egg Products, Inc. and affiliated companies (collectively, “Papetti’s”). In connection with this acquisition, the Predecessor entered into various operating leases with the previous owners of Papetti’s for the majority of Papetti’s operating facilities. The future annual minimum rental commitments under these leases are approximately $2,100,000 through February 2007, with the exception of one lease that expires in February 2017. In addition, the Company and Predecessor purchase eggs under an annual egg supply agreement with a partnership in which various Papetti family members own a 50% interest. Annual purchases in 2001 from this partnership were approximately $10,000,000. Following the Merger, the previous owners of Papetti’s are no longer considered to be related parties, as these individuals no longer own Company stock. The Company continues to be obligated under the operating lease obligations and egg supply contracts described above.

NOTE H—COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company’s corporate offices and several of its manufacturing facilities are leased under operating leases expiring at various times through February 2017. The leases provide that real estate taxes, insurance, and maintenance expenses are obligations of the Company. In addition, the Company leases some of its transportation and manufacturing equipment under operating leases.

Rent expense, including real estate taxes and maintenance expenses, was approximately $11,258,000 for the year ended December 31, 2002 and $8,795,000 for the nine months ended December 31, 2001. Predecessor rent expense was $2,002,000 for the three months ended March 31, 2001 and $8,639,000 for the year ended December 31, 2000. The following is a schedule of minimum rental commitments for base rent for the years ending December 31:

2003	$	6,901,000
2004		7,006,000
2005		5,553,000
2006		5,014,000
2007		3,324,000
Thereafter		16,079,000

F-40

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Debt Guarantees

The Company has guaranteed the repayment of certain industrial revenue bonds used for the expansion of the wastewater treatment facilities of several municipalities where the Company has manufacturing facilities. The repayment of these bonds is funded through the wastewater treatment charges paid by the Company. However, should those charges not be sufficient to pay the bond payments as they become due the Company has agreed to pay any shortfall. The remaining principal balance of these bonds at December 31, 2002 was approximately $6,700,000.

Potato Procurement Contract

The Company has a contract to purchase potatoes which expires in 2004 and which will supply approximately 45% and 40% of the potato products division’s raw material needs in 2003 and 2004, respectively.

Egg Procurement Contracts

The Company maintains egg procurement contracts with numerous cooperatives and egg producers throughout the Midwestern and Eastern United States and Canada, which supply approximately 50% of the Company’s egg requirements. Most of these contracts vary in length from 18 to 72 months with prices primarily indexed to grain or Urner Barry market indices. No single egg supplier provides more than 10% of the Company’s egg requirements. Based upon the best estimates available to us for grain and egg prices, we project our purchases from our top five long-term contracted egg suppliers will approximate $141 million in 2003, $138 million in 2004, $82 million in 2005, and $16 million in 2007, and that the 2003 amount will account for approximately 60% of our total egg purchases this year.

Patent Litigation

The Company has an exclusive license agreement for a patented process for the production and sale of extended shelf-life liquid egg products. Under the license agreement, the Company has the right to defend and prosecute infringement of the underlying patents. The Company may offset 50% of its costs of defending the patents against royalty payments due to the patent holders-North Carolina State University.

The U.S. Federal Court of Appeals has upheld the validity of the patents on two separate occasions. The U.S. Patent and Trademark Office allowed product claims beyond the process claims previously allowed for the extended shelf-life egg product. These patents are scheduled to expire in 2006.

In 2000, the Predecessor settled litigation with one party related to the infringement of these patents and issued a sub-license to the infringing party granting them the right to manufacture and distribute extended shelf-life liquid whole egg product subject to a royalty payable to the Company and the patent holder on all future product sold. In connection with this settlement, the patent holder received a lump sum payment for the past production and sale of the product and other matters related to the infringement. The Company is continuing to pursue litigation related to other parties who are infringing the product and process patents, including Sunny Fresh Foods, Inc., a subsidiary of Cargill, Inc., Rose Acre Farms and Cutler Egg Products.

Other Litigation

The Company is engaged in routine litigation incidental to its business. Management believes the ultimate outcome of this litigation will not have a material effect on the Company’s consolidated financial position, liquidity or results of operations.

F-41

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

NOTE I—SHAREHOLDER’S EQUITY

Company—Common Stock

The Company has authorized, issued and outstanding common stock of 1,000 shares with a $.01 par value. All common shares were issued to M-Foods Holdings, Inc., a wholly owned subsidiary of M-Foods Investors, LLC, in connection with the Merger.

Predecessor—Capital Stock

The Predecessor had authorized capital stock of 50,000,000 shares consisting of 40,000,000 shares of $.01 par value common stock and 10,000,000 shares of undesignated stock. The Board of Directors had the authority to determine voting, conversion and other rights of the undesignated stock.

Incentive Plan

The Predecessor had an incentive compensation plan for certain key employees. The Predecessor utilized unissued common stock for a portion of the incentive compensation in this plan. The Predecessor accrued for all incentive compensation as earned. In connection with the Merger, this Plan was terminated and all shares of common stock previously awarded under the plan were retired through the Merger.

Stock Option Plans

The Predecessor maintained non-qualified stock option plans. The stock options granted under these plans generally had a ten year term, vested ratably over five years, and had an exercise price equal to the fair market value of the stock on the date of grant. In connection with the Merger, all options for common stock previously awarded became fully vested in accordance with the terms of the respective plans and the option holders, except for certain options held by senior members of management, were paid the difference between the $30.10 per share consideration and the exercise price of their respective options (See Note A).

Option transactions under these plans for the year ended December 31, 2000 and the three months ended March 31, 2001, are summarized as follows:

	NUMBER OF SHARES		WEIGHTED AVERAGE EXERCISE PRICE
Outstanding at January 1, 2000	1,638,541		18.53
Granted	306,500		21.51
Exercised	(65,070	)	13.09
Canceled	(60,056	)	22.01
Outstanding at December 31, 2000	1,819,915		19.11
Exercised	(36,581	)	14.94
Canceled	(2,889	)	23.69
Outstanding at March 31, 2001	1,780,445		19.20

F-42

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

The following tables summarize information concerning outstanding and exercisable stock options at March 31, 2001:

OPTIONS OUTSTANDING

EXERCISE PRICES
RANGE	WEIGHTED AVERAGE	NUMBER OF SHARES	WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE
$7.63 -$11.13	$10.04	368,800	3.9 years
11.50 -15.13	12.53	233,019	3.8 years
17.83 -24.56	21.90	605,526	7.9 years
24.69 -29.75	25.04	573,100	7.2 years
		1,780,445

OPTIONS EXERCISABLE

EXERCISE PRICES
RANGE	WEIGHTED AVERAGE	NUMBER OF SHARES
$7.63 -$11.13	$10.00	350,100
11.50 -15.13	12.53	229,019
17.83 -24.56	21.86	238,606
24.69 -29.75	25.19	310,000
		1,127,725

Pro forma net earnings would have been $43,037,000 had the fair value method been used for valuing options granted in the year ended 2000.

The weighted average fair value of options granted in the year ended 2000 were $9.49 per share, computed by applying the following weighted average assumptions to the Black Scholes options pricing model: dividend yield of 1%; risk-free rate of return of 5.1%; volatility of 40%, and an average term of 7 years. There were no options granted during the three months ended March 31, 2001.

NOTE J—BUSINESS SEGMENTS

The Company operates in four reportable segments:

Egg products processes and distributes numerous egg products and shell eggs primarily through its facilities in the Midwest and Eastern United States and Canada. Sales of egg products are made through an internal sales force and independent brokers to the foodservice, industrial and retail markets primarily throughout North America.

Refrigerated distribution distributes a wide range of refrigerated food products, including various cheese products packaged at its Wisconsin cheese packaging facility. Sales of refrigerated food products are made through an internal sales force to retail and wholesale markets primarily throughout the central United States.

F-43

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Dairy products processes and distributes soft serve ice cream mix, frozen yogurt mix, milk and specialty dairy products, many of which are ultra-high temperature pasteurized, from its facilities in Connecticut, Minnesota and Texas. Sales of dairy products are made through an internal sales force to domestic quick service restaurants, other foodservice outlets and independent retailers throughout the United States.

Potato products processes and distributes refrigerated potato products from its manufacturing facilities in Minnesota and Nevada. Sales of potato products are made through an internal sales force to foodservice and retail markets throughout the United States.

The Company identifies its segments based on its organizational structure, which is primarily by principal products. Operating profit represents earnings before interest expense, interest income, income taxes, and allocations of corporate costs to the respective divisions. Intersegment sales are made at market prices. The Company’s corporate office maintains a majority of the Company’s cash under its cash management policy.

Sales to two customers, primarily by the egg products segment, accounted for approximately 17% and 15% of consolidated net sales for the year ended December 31, 2002 and 18% and 15% of consolidated net sales for the nine months ended December 31, 2001. Accounts receivable for one customer was 14% of consolidated accounts receivable at December 31, 2002. The Predecessor had sales to one customer, which accounted for approximately 12% of consolidated net sales for the three months ended March 31, 2001 and 15% of consolidated net sales for the year ended December 31, 2000.

F-44

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Certain financial information for the Company’s operating segments is as follows (in thousands):

	EGG PRODUCTS		REFRIGERATED DISTRIBUTION		DAIRY PRODUCTS		POTATO PRODUCTS		CORPORATE			TOTAL
Company
Year ended December 31, 2002:
External net sales	$	657,824	$	247,588	$	190,578	$	72,170	$	—		$	1,168,160
Intersegment sales		12,375		—		81		3,376		—			15,832
Operating profit (loss)		71,717		13,744		9,918		10,832		(7,828	)		98,383
Total assets		644,395		83,224		52,248		78,526		34,629			893,022
Depreciation and amortization		42,833		2,108		4,626		4,658		34			54,259
Capital expenditures		18,198		1,167		6,399		1,630		—			27,394
Nine months ended December 31, 2001:
External net sales	$	482,324	$	201,496	$	150,554	$	51,268	$	—		$	885,642
Intersegment sales		9,137		—		—		2,552		—			11,689
Operating profit (loss)		48,648		4,947		7,885		6,639		(3,969	)		64,150
Total assets		623,502		90,844		49,691		80,303		52,793			897,133
Depreciation and amortization		37,020		1,990		3,120		4,787		28			46,945
Capital expenditures		13,604		2,327		5,810		1,549		9			23,299
Predecessor
Three months ended March 31, 2001:
External net sales	$	163,529	$	61,185	$	35,328	$	15,585	$	—		$	275,627
Intersegment sales		4,246		—		—		1,003		—			5,249
Operating profit (loss)		12,915		3,639		3,958		1,688		(12,706	)		9,494
Depreciation and amortization		9,611		339		1,274		1,278		33			12,535
Capital expenditures		3,990		248		5,916		683		—			10,837
Year ended December 31, 2000:
External net sales	$	637,355	$	241,114	$	141,401	$	60,731	$	—		$	1,080,601
Intersegment sales		13,357		80		516		2,477		—			16,430
Operating profit (loss)		67,658		16,001		1,322		7,650		(5,825	)		86,806
Total assets		461,298		45,716		53,505		44,122		8,263			612,904
Depreciation and amortization		36,435		1,316		4,724		5,372		136			47,983
Capital expenditures		25,376		1,042		9,565		1,390		—			37,373

NOTE K—SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

On November 20, 2003, in connection with our merger transaction, we entered into a new $100 million revolving line of credit agreement, a $495 million term loan, a $135 million Senior Unsecured term loan facility and issued $150 million aggregate principal amount of senior subordinated notes, all of which have been guaranteed on a joint and several basis by us and our wholly owned domestic subsidiaries.

The following condensed consolidating financial information presents the consolidated balance sheet and statements of earnings and cash flows of the Company as of December 31, 2002 and the nine months

F-45

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

ended December 31, 2001, and the Predecessor’s consolidated balance sheet as of December 31, 2000 and the consolidated statements of earnings and cash flows for the three months ended March 31, 2001 and for the year ended December 31, 2000. These financial statements reflect Michael Foods, Inc. (the parent), the wholly owned guarantor subsidiaries (on a combined basis), the non-wholly owned subsidiaries, and elimination entries necessary to combine such entities on a consolidated basis.

Condensed Consolidating Balance Sheets

December 31, 2002

(in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations			Consolidated
						M-Foods Dairy, LLC		M-Foods Dairy TXCT, LLC
Assets
Current Assets
Cash and equivalents	$	19,665		$	907	$	—	$	—	$	—		$	20,572
Accounts receivable, less allowances		314			90,108		7,836		4,399		(1,078	)		101,579
Inventories		—			88,376		3,412		4,019		—			95,807
Prepaid expenses and other		202			12,704		600		65		—			13,571
Total current assets		20,181			192,095		11,848		8,483		(1,078	)		231,529
Property, Plant and Equipment—net		44			252,825		18,104		11,380		—			282,353
Other assets:
Goodwill		—			339,265		1,763		—		—			341,028
Joint ventures and other assets		15,362			22,082		139		529		—			38,112
Preferred return receivable for subs		—			17,170		—		—		(17,170	)		—
Investment in subsidiaries		639,819			—		—		—		(639,819	)		—
		655,181			378,517		1,902		529		(656,989	)		379,140
Total assets	$	675,406		$	823,437	$	31,854	$	20,392	$	(658,067	)	$	893,022
Liabilities and Shareholder’s Equity
Current Liabilities
Current maturities of long-term debt	$	14,714		$	557	$	—	$	2,400	$	—		$	17,671
Accounts payable		426			60,933		2,836		2,873		(1,078	)		65,990
Accrued liabilities		35,372			49,953		2,352		1,046		—			88,723
Total current liabilities		50,512			111,443		5,188		6,319		(1,078	)		172,384
Long-term debt, less current maturities		448,734			44,984		—		—		—			493,718
Deferred income taxes		(3,641	)		50,760		—		—		—			47,119
Total liabilities		495,605			207,187		5,188		6,319		(1,078	)		713,221
Non-controlling interest		475			—		—		—		—			475
Preferred unit holder return payable		—			—		12,442		4,728		(17,170	)		—
Shareholder’s equity		179,326			616,250		14,224		9,345		(639,819	)		179,326
Total liabilities and shareholder’s equity	$	675,406		$	823,437	$	31,854	$	20,392	$	(658,067	)	$	893,022

F-46

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Company

Condensed Consolidating Balance Sheets

December 31, 2001

(in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarnator Subsidiaries
							M-Foods Dairy, LLC		M-Foods Dairy TXCT, LLC		Eliminations			Consolidated
Assets
Current Assets
Cash and equivalents	$	33,947		$	(6,287	)	$	—	$	—	$	—		$	27,660
Accounts receivable, less allowances		223			91,744			6,535		5,765		(1,950	)		102,317
Inventories		—			72,034			3,592		3,315		—			78,941
Prepaid expenses and other		972			9,850			496		52		—			11,370
Total current assets		35,142			167,341			10,623		9,132		(1,950	)		220,288
Property, Plant and Equipment—net		78			263,893			15,657		11,526		—			291,154
Other assets:
Goodwill, net		—			339,258			1,763		—		—			341,021
Joint ventures and other assets		19,521			24,091			—		1,058		—			44,670
Preferred return receivable for subs		—			8,188			—		—		(8,188	)		—
Investment in subsidiaries		675,556			—			—		—		(675,556	)		—
		695,077			371,537			1,763		1,058		(683,744	)		385,691
Total assets	$	730,297		$	802,771		$	28,043	$	21,716	$	(685,694	)	$	897,133
Liabilities and Shareholder’s Equity
Current Liabilities
Current maturities of long-term debt	$	10,255		$	307		$	—	$	2,400	$	—		$	12,962
Accounts payable		265			60,223			2,612		3,342		(1,950	)		64,492
Accrued liabilities		30,210			44,020			2,151		976		—			77,357
Total current liabilities		40,730			104,550			4,763		6,718		(1,950	)		154,811
Long-term debt, less current maturities		537,395			337			—		2,400		—			540,132
Deferred income taxes		(1,293	)		50,018			—		—		—			48,725
Total liabilities		576,832			154,905			4,763		9,118		(1,950	)		743,668
Non-controlling interest		475			—			—		—		—			475
Preferred unit holder return payable		—			—			7,500		688		(8,188	)		—
Shareholder’s equity		152,990			647,866			15,780		11,910		(675,556	)		152,990
Total liabilities and shareholder’s equity	$	730,297		$	802,771		$	28,043	$	21,716	$	(685,694	)	$	897,133

F-47

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Company

Condensed Consolidating Earnings Statements

Year ended December 31, 2002

(in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Eliminations			Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net sales	$	—		$	993,333		$	105,299		$	85,360		$	(15,832	)	$	1,168,160
Cost of sales		—			796,995			94,693			77,477			(15,832	)		953,333
Gross profit		—			196,338			10,606			7,883			—			214,827
Selling, general and administrative expenses		7,828			104,019			5,563			3,830			(4,796	)		116,444
Operating profit (loss)		(7,828	)		92,319			5,043			4,053			4,796			98,383
Interest expense, net		(46,800	)		(3,264	)		(102	)		(13	)		—			(50,179	)
Other income (expense)		4,796			—			—			—			(4,796	)		—
Earnings (loss) before preferred stock dividends, equity in earnings (loss) of subsidiaries and income taxes		(49,832	)		89,055			4,941			4,040			—			48,204
Preferred stock dividends		—			8,981			(4,941	)		(4,040	)		—			—
Equity in earnings (loss) of subsidiaries		59,556			—			—			—			(59,556	)		—
Earnings (loss) before income taxes		9,724			98,036			—			—			(59,556	)		48,204
Income tax expense (benefit)		(19,937	)		38,480			—			—			—			18,543
NET EARNINGS (LOSS)	$	29,661		$	59,556		$	—		$	—		$	(59,556	)	$	29,661

F-48

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Company

Condensed Consolidating Earnings Statements

Nine months ended December 31, 2001

(in thousands)

							Non-Guarnator Subsidiaries
	Parent			Guarantor Subsidiaries			M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC			Eliminations			Consolidated
Net sales	$	—		$	746,777		$	69,911		$	80,643		$	(11,689	)	$	885,642
Cost of sales		—			608,961			59,626			77,110			(11,689	)		734,008
Gross profit		—			137,816			10,285			3,533			—			151,634
Selling, general and administrative expenses		3,969			80,043			3,194			3,367			(3,089	)		87,484
Operating profit (loss)		(3,969	)		57,773			7,091			166			3,089			64,150
Interest income (expense), net		(42,361	)		(436	)		409			53			—			(42,335	)
Other income		3,089			—			—			—			(3,089	)		—
Earnings (loss) before preferred stock dividends, equity in earnings (loss) of subsidiaries and income taxes		(43,241	)		57,337			7,500			219			—			21,815
Preferred stock dividends		—			8,188			(7,500	)		(688	)		—			—
Equity in earnings (loss) of subsidiaries		29,269			(469	)		—			469			(29,269	)		—
Earnings (loss) before income taxes		(13,972	)		65,056			—			—			(29,269	)		21,815
Income tax expense (benefit)		(23,787	)		35,787			—			—			—			12,000
NET EARNINGS (LOSS)	$	9,815		$	29,269		$	—		$	—		$	(29,269	)	$	9,815

F-49

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Predecessor

Condensed Consolidating Earnings Statements

Three months ended March 31, 2001

(in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations			Consolidated
						M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net sales	$	—		$	245,548	$	17,684		$	17,644		$	(5,249	)	$	275,627
Cost of sales		—			200,854		14,994			17,108			(5,249	)		227,707
Gross profit		—			44,694		2,690			536			—			47,920
Selling, general and administrative expenses		1,656			27,720		1,027			1,712			(1,522	)		30,593
Recall insurance settlement		—			—		(3,217	)		—			—			(3,217	)
Transaction costs		11,050			—		—			—			—			11,050
Operating profit (loss)		(12,706	)		16,974		4,880			(1,176	)		1,522			9,494
Interest income (expense), net		(3,308	)		14		1			—			—			(3,293	)
Other income (expense)		(13,991	)		—		—			—			(1,522	)		(15,513	)
Earnings (loss) before equity in earnings of subsidiaries and income taxes		(30,005	)		16,988		4,881			(1,176	)		—			(9,312	)
Equity in earnings (loss) of subsidiaries		12,573			—		—			—			(12,573	)		—
Earnings (loss) before income taxes		(17,432	)		16,988		4,881			(1,176	)		(12,573	)		(9,312	)
Income tax expense (benefit)		(11,779	)		6,649		1,918			(447	)		—			(3,659	)
NET EARNINGS (LOSS)	$	(5,653	)	$	10,339	$	2,963		$	(729	)	$	(12,573	)	$	(5,653	)

F-50

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Predecessor

Condensed Consolidating Earnings Statements

Year ended December 31, 2000

(in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries					Eliminations			Consolidated
						M-Foods Dairy, LLC		M-Foods Dairy TXCT, LLC
Net sales	$	—		$	955,115	$	68,102	$	73,814		$	(16,430	)	$	1,080,601
Cost of sales		—			775,173		59,948		70,447			(16,430	)		889,138
Gross profit		—			179,942		8,154		3,367			—			191,463
Selling, general and administrative expenses		5,825			93,294		3,668		7,412			(5,542	)		104,657
Operating profit (loss)		(5,825	)		86,648		4,486		(4,045	)		5,542			86,806
Interest income (expense), net		(13,276	)		64		6		—			—			(13,206	)
Other income		5,542			—		—		—			(5,542	)		—
Earnings (loss) before equity in earnings of subsidiaries and income taxes		(13,559	)		86,712		4,492		(4,045	)		—			73,600
Equity in earnings (loss) of subsidiaries		53,279			—		—		—			(53,279	)		—
Earnings (loss) before income taxes		39,720			86,712		4,492		(4,045	)		(53,279	)		73,600
Income tax expense (benefit)		(4,990	)		33,651		1,766		(1,537	)		—			28,890
NET EARNINGS (LOSS)	$	44,710		$	53,061	$	2,726	$	(2,508	)	$	(53,279	)	$	44,710

F-51

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Predecessor

Condensed Consolidating Statements of Cash Flows

Year ended December 31, 2002

(in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net cash provided by operating activities	$	32,175		$	37,773		$	6,144		$	6,913		$	83,005
Cash flows from investing activities:
Capital expenditures		—			(20,997	)		(4,449	)		(1,948	)		(27,394	)
Business acquisitions		—			(17,883	)		—			—			(17,883	)
Investments in joint ventures and other assets		(133	)		5,024			(139	)		—			4,752
Net cash used in investing activities		(133	)		(33,856	)		(4,588	)		(1,948	)		(40,525	)
Cash flows from financing activities:
Payments on notes payable and revolving line of credit		(30,000	)		—			—			—			(30,000	)
Proceeds from notes payable and revolving line of credit		25,000			—			—			—			25,000
Payments on long-term debt		(42,345	)		(529	)		—			(2,400	)		(45,274	)
Proceeds from issuance of stock		—			—			—			—			—
Additional capital invested by parent		706			—			—			—			706
Distribution to preferred unit holders		—			4,121			(1,556	)		(2,565	)		—
Investment in subsidiaries		315			(315	)		—			—			—
Net cash provided by (used in) financing activities		(46,324	)		3,277			(1,556	)		(4,965	)		(49,568	)
Net increase (decrease) in cash and equivalents		(14,282	)		7,194			—			—			(7,088	)
Cash and equivalents at beginning of year		33,947			(6,287	)		—			—			27,660
Cash and equivalents at end of year	$	19,665		$	907		$	—		$	—		$	20,572

F-52

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Company

Condensed Consolidating Statements of Cash Flows

Nine months ended December 31, 2001

(in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net cash provided by operating activities	$	28,125		$	52,276		$	13,334		$	7,058		$	100,793
Cash flows from investing activities:
Capital expenditures		(9	)		(17,480	)		(1,770	)		(4,040	)		(23,299	)
Business acquisitions		(626,925	)		—			—			—			(626,925	)
Investments in joint ventures and other assets		(249	)		(4,704	)		—			—			(4,953	)
Net cash used in investing activities		(627,183	)		(22,184	)		(1,770	)		(4,040	)		(655,177	)
Cash flows from financing activities:
Payments on notes payable and revolving line of credit		(65,750	)		—			—			—			(65,750	)
Proceeds from notes payable and revolving line of credit		53,800			—			—			—			53,800
Payments on long-term debt		(152,349	)		(357	)		—			(2,400	)		(155,106	)
Proceeds from long-term debt		570,000			—			—			—			570,000
Proceeds from issuance of stock		174,800			—			—			—			174,800
Additional capital invested by parent		30			—			—			—			30
Distribution to preferred unit holders		—			12,189			(11,571	)		(618	)		—
Investment in subsidiaries		48,147			(48,147	)		—			—			—
Net cash provided by (used in) financing activities		628,678			(36,315	)		(11,571	)		(3,018	)		577,774
Net increase (decrease) in cash and equivalents		29,620			(6,223	)		(7	)		—			23,390
Cash and equivalents at beginning of period		4,327			(64	)		7			—			4,270
Cash and equivalents at end of period	$	33,947		$	(6,287	)	$	—		$	—		$	27,660

F-53

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Predecessor

Condensed Consolidating Statements of Cash Flows

Three months ended March 31, 2001

(in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net cash provided by (used in) operating activities	$	12,000		$	4,487		$	(2,440	)	$	(31	)	$	14,016
Cash flows from investing activities:
Capital expenditures		—			(4,923	)		(3,664	)		(2,250	)		(10,837	)
Investments in joint ventures and other assets		434			3,454			—			—			3,888
Net cash provided by (used in) investing Activities		434			(1,469	)		(3,664	)		(2,250	)		(6,949	)
Cash flows from financing activities:
Payments on notes payable and revolving line of credit		(52,000	)		—			—			—			(52,000	)
Proceeds from notes payable and revolving line of credit		45,500			—			—			—			45,500
Payments on long-term debt		—			(109	)		—			—			(109	)
Proceeds from issuance of stock		546			—			—			—			546
Other		310			—			—			—			310
Dividends		(1,465	)		—			—			—			(1,465	)
Investment in subsidiaries		(9,785	)		1,393			6,111			2,281			—
Net cash provided by (used in) financing activities		(16,894	)		1,284			6,111			2,281			(7,218	)
Net increase (decrease) in cash and equivalents		(4,460	)		4,302			7			—			(151	)
Cash and equivalents at beginning of period		8,787			(4,366	)		—			—			4,421
Cash and equivalents at end of period	$	4,327		$	(64	)	$	7		$	—		$	4,270

F-54

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

Predecessor

Condensed Consolidating Statements of Cash Flows

Year ended December 31, 2000

(in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries						Consolidated
							M-Foods Dairy, LLC			M-Foods Dairy TXCT, LLC
Net cash provided by (used in) operating activities	$	47,044		$	18,514		$	3,900		$	(373	)	$	69,085
Cash flows from investing activities:
Capital expenditures		—			(27,808	)		(3,181	)		(6,384	)		(37,373	)
Investments in joint ventures and other assets		(112	)		(1,015	)		—			—			(1,127	)
Net cash used in investing activities		(112	)		(28,823	)		(3,181	)		(6,384	)		(38,500	)
Cash flows from financing activities:
Payments on notes payable and revolving line of credit		(168,400	)		—			—			—			(168,400	)
Proceeds from notes payable and revolving line of credit		191,600			—			—			—			191,600
Payments on long-term debt		—			(709	)		—			(2,400	)		(3,109	)
Proceeds from long-term debt		—			184			—			—			184
Proceeds from issuance of stock		651			—			—			—			651
Repurchase of common stock		(46,125	)		—			—			—			(46,125	)
Dividends		(5,926	)		—			—			—			(5,926	)
Investment in subsidiaries		(16,621	)		8,183			(719	)		9,157			—
Net cash provided by (used in) financing activities		(44,821	)		7,658			(719	)		6,757			(31,125	)
Net increase (decrease) in cash and equivalents		2,111			(2,651	)		—			—			(540	)
Cash and equivalents at beginning of year		6,676			(1,715	)		—			—			4,961
Cash and equivalents at end of year	$	8,787		$	(4,366	)	$	—		$	—		$	4,421

F-55

MICHAEL FOODS, INC.

(A wholly owned subsidiary of M-Foods Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

NOTE L—QUARTERLY FINANCIAL DATA

QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands)

As a result of the Merger, the stock of the Predecessor is no longer publicly traded and, therefore, earnings per share information is no longer included for financial statement presentation.

	QUARTER
	FIRST			SECOND		THIRD		FOURTH
2002
Net sales	$	278,429		$	289,753	$	293,954	$	306,024
Gross profit		51,116			54,204		54,177		55,330
Net earnings		5,359			7,316		7,366		9,620
	Predecessor			Company
	QUARTER
	FIRST			SECOND		THIRD		FOURTH
2001
Net sales	$	275,627		$	295,109	$	299,225	$	291,308
Gross profit		47,920			50,254		50,789		50,591
Net earnings (loss)		(5,653	)		1,669		3,297		4,849

F-56

Until                      , 2004, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments of subscriptions.

$150,000,000

Offer to exchange all outstanding

$150,000,000 principal amount of

8% Senior Subordinated Notes Due 2013

for

$150,000,000 principal amount of

8% Senior Subordinated Notes due 2013

registered under the Securities Act of 1933

PROSPECTUS

                    , 2004

PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 20: Indemnification of Directors and Officers.

The following is a summary of the statutes, charter and bylaw provisions or other arrangements under which the Registrants’ directors and officers are insured or indemnified against liability in their capacities as such. All of the directors and officers of the Registrants are covered by insurance policies maintained and held in effect by Michael Foods, Inc. against certain liabilities for actions taken in their capacities as such, including liabilities under the Securities Act.

Registrants Incorporated Under Delaware Law

Michael Foods, Inc. and Michael Foods of Delaware, Inc. are incorporated under the laws of the State of Delaware. Section 145 of the General Corporation Law of the State of Delaware (the “Delaware Statute”) provides that a Delaware corporation may indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), other than an action by or in the right of such corporation, by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise (an “indemnified capacity”). The indemnity may include expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. Similar provisions apply to actions brought by or in the right of the corporation, except that no indemnification shall be made without judicial approval if the officer or director is adjudged to be liable to the corporation. Section 145 of the Delaware Statute also provides that such indemnification, unless ordered by a court, must be authorized (i) by a majority vote of disinterested directors, even if less than a quorum, (ii) by a committee of such directors designated by majority vote of such directors, even if less than a quorum, (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders, upon a determination that indemnification of the director or officer has met the applicable standard of conduct.

Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred. Section 145 of the Delaware Statute further authorizes a corporation to purchase and maintain insurance on behalf of any indemnified person against any liability asserted against him and incurred by him in any indemnified capacity, or arising out of his status as such, regardless of whether the corporation would otherwise have the power to indemnify him under the Delaware Statute.

The Amended and Restated Certificate of Incorporation of Michael Foods, Inc., as amended, provides that a director shall not be liable to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director to the fullest extent permitted by the Delaware Statute. The bylaws of Michael Foods, Inc. provide that indemnification may be provided to any director or officer who was or is a party to any action, suit or proceeding to the fullest extent provided by the Delaware Statute.

The Amended and Restated Certificate of Incorporation of Michael Foods of Delaware, Inc. provides that a director shall not be liable to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director to the fullest extent permitted by the Delaware Statute and that, in addition, no director shall be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law,

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(iii) under Section 174 of the Delaware Statute, or (iv) for any transaction from which the director derived an improper personal benefit. The bylaws of Michael Foods of Delaware, Inc. do not contain indemnification provisions.

Registrants Incorporated Under Minnesota Law

Casa Trucking, Inc., Crystal Farms Refrigerated Distribution Company, KMS Dairy, Inc., Minnesota Products, Inc., Northern Star Co. and Papetti’s Hygrade Egg Products, Inc. are incorporated under the laws of the State of Minnesota. Section 302A.521 of the Minnesota Business Corporation Act (the “Minnesota Statute”) provides that a corporation shall indemnify any person made or threatened to be made a party to a proceeding by reason of the former or present official capacity of such person against judgments, penalties, fines (including, without limitation, excise taxes assessed against such person with respect to any employee benefit plan), settlements and reasonable expenses, including attorneys’ fees and disbursements, incurred by such person in connection with the proceeding, if, with respect to the acts or omissions of such person complained of in the proceeding, such person: (i) has not been indemnified therefor by another organization or employee benefit plan, (ii) acted in good faith, (iii) received no improper personal benefit and Section 302A.255 of the Minnesota Statute (with respect to director conflicts of interest), if applicable, has been satisfied, (iv) in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful, and (v) reasonably believed that the conduct was in the best interests of the corporation in the case of acts or omissions in such person’s official capacity for the corporation or reasonably believed that the conduct was not opposed to the best interests of the corporation in the case of acts or omissions in such person’s official capacity for other affiliated organizations. Section 302A.521 of the Minnesota Statute further authorizes a corporation to purchase and maintain insurance on behalf of a person in that person’s official capacity, regardless of whether the corporate would be required to indemnify such person under the Minnesota Statute.

All determinations of whether indemnification of a director or officer is required under Section 302A.521 of the Minnesota Statute must be made: (i) by the board of directors by a majority of a quorum of disinterested directors, (ii) if a quorum cannot be obtained, by a majority of a committee of the board, consisting solely of two or more disinterested directors, designated to act in the matter by a majority of the full board, (iii) by special legal counsel, selected either by a majority of the board or a committee by vote pursuant to clause (i) or (ii) above or, if the requisite quorum of the full board cannot be obtained and the committee cannot be established, by a majority of the full board, (iv) by the affirmative vote of the shareholders (interested shareholders’ votes are not counted), or (v) by a court, if an adverse determination is made under clauses (i) to (iv) above, or if no determination is made under clauses (i) to (iv) within 60 days after either (a) the later to occur of the termination of a proceeding or a written request for indemnification to the corporation, or (b) a written request for an advance of expenses.

The Articles of Incorporation and bylaws of each of Papetti’s Hygrade Egg Products, Inc. and Casa Trucking, Inc. authorize indemnification of directors and officers of the corporation to the fullest extent provided by the Minnesota Statute.

The Articles of Incorporation of Crystal Farms Refrigerated Distribution Company provide that the corporation shall indemnify a director of the corporation for actions claiming breach of fiduciary duty as a director, except for (i) liability based upon breach of a duty of loyalty, (ii) liability for acts not performed in good faith, intentional misconduct, or a knowing violation of law, (iii) liability based on payment of an improper dividend, or (iv) liability based on a transaction in which the director received an improper personal benefit. The bylaws of Crystal Farms Refrigerated Distribution Company authorize the indemnification of directors and officers to the fullest extent provided by the Minnesota Statute.

The Articles of Incorporation of Minnesota Products, Inc. provide that the corporation shall indemnify all persons made party to pending or threatened actions by reason of the fact that such person acted as a director, officer, employee or agent of the corporation and provided that such person acted in good faith, and, in a manner

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he or she reasonably believed to be not opposed to the best interests of the corporation, and, with respect to a criminal action, had no reasonable cause to believe his or her conduct was unlawful. Similar provisions apply with respect to actions brought by or on behalf of the corporation, except that no indemnification will be provided if the director or officer is adjudged liable for negligence or misconduct in connection with the performance of duties, unless a court directs otherwise. The articles require the corporation to indemnify a director or officer who is wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director or officer of the corporation, against reasonable expenses incurred by him or her. The bylaws of Minnesota Products, Inc. do not include indemnification provisions.

The Articles of Incorporation and bylaws of KMS Dairy, Inc. and Northern Star Co. contain no articles, sections or provisions relating to indemnification.

Registrants Incorporated Under Nebraska Law

M.G. Waldbaum Company is incorporated under the laws of the State of Nebraska. Under Sections 21-20,102 to 21-20,111 of the Nebraska Business Corporation Act (the “Nebraska Statute”), indemnification of directors and officers may be provided for judgments, fines, settlements, penalties, and expenses, including attorney’s fees, incurred in connection with any threatened, pending, or completed action, suit, or proceeding other than an action by or in the right of the corporation. This applies to any civil, criminal, investigative or administrative action provided that the director or officer involved acted in good faith, in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The Nebraska Statute further provides that, unless ordered by a court, a corporation may not indemnify a director or officer: (i) in connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding, if it is determined that the director or officer has met the relevant standard of conduct referenced above, or (ii) in connection with any proceeding with respect to conduct for which a director or officer was adjudged liable on the basis that he or she received a financial benefit to which he or she was not entitled. The Nebraska Statute directs that any such indemnification must be authorized upon a determination that such indemnification is proper: (i) if there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote, (ii) by special legal counsel selected in the manner prescribed in clause (i) above or if there are fewer than two disinterested directors, selected by the board of directors in which selection directors who do not qualify as disinterested directors may participate, or (iii) by the shareholders, but shares owned by or voted under the control of an interested director may not be voted on the determination.

The Nebraska Statute provides that a corporation must indemnify a director or officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party against reasonable expenses incurred by him or her. With respect to officers who are not directors, the Nebraska Statute provides that a corporation may indemnify such officer to such further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors, or contract except for (a) liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding, or (b) liability arising out of conduct that constitutes (i) receipt by him or her of a financial benefit to which he or she is not entitled, (ii) an intentional infliction of harm on the corporation or the shareholders, or (iii) an intentional violation of criminal law. A corporation may purchase and maintain insurance on behalf of a director or officer against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director or officer regardless of whether the corporation would have the power to indemnify him or her under the Nebraska Statute.

The bylaws of M.G. Waldbaum Company provide that the corporation shall indemnify all persons acting as directors, officers, or agents of the corporation made a party to any action, suit or proceeding if such persons

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acted in good faith and in a manner which they reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to a criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. The bylaws contain similar provisions with respect to actions brought by or on behalf of the corporation, except that no indemnification will be provided if the director or officer is adjudged liable for negligence or misconduct in connection in the performance of duties, unless a court directs otherwise. The bylaws provide that the corporation must indemnify a director or officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director or officer of the corporation, against reasonable expenses incurred by him or her. The Articles of Incorporation of M.G. Waldbaum Company do not include provisions addressing indemnification.

Registrants Incorporated Under Nevada Law

Farm Fresh Foods, Inc. is incorporated under the laws of the State of Nevada. Sections 78.7502 to 78.752 of the Nevada General Corporation Law (the “Nevada Statute”) require a corporation to indemnify officers and directors for any expenses, including attorneys’ fees, actually and reasonably incurred by any officer or director in connection with any actions or proceedings, whether civil, criminal, administrative, or investigative, brought against such officer or director because of his or her status as an officer or director, to the extent that the officer or director has been successful on the merits or otherwise in defense of the action or proceeding. The Nevada Statute permits a corporation to indemnify an officer or director, even in the absence of an agreement to do so, for expenses actually and reasonably incurred in connection with any action or proceeding (i) if such officer or director (a) acted in good faith and in a manner in which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, (b) is not liable pursuant to Section 78.138 of the Nevada Statute (fiduciary duties), and (c) with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, or (ii) with respect to an action by or in the right of the corporation, if such officer or director (a) acted in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and (b) is not liable pursuant to Section 78.138 of the Nevada Statute (fiduciary duties), except that indemnification may not be made for any claim, issue or matter as to which a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court determines upon application that the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

The Nevada Statute also prohibits indemnification of an officer or director if a final adjudication establishes that the officer’s or director’s acts or omissions involved intentional misconduct, fraud, or a knowing violation of the law and were material to the cause of action. Despite the foregoing limitations on indemnification, the Nevada Statute may permit an officer or director to apply to the court for approval of indemnification even if the officer or director is adjudged to have committed intentional misconduct, fraud, or a knowing violation of the law. The Nevada Statute further provides that a corporation may purchase and maintain insurance for officers and directors against liabilities incurred while acting in such capacities regardless of whether the corporation has the authority to indemnify such persons under the Nevada Statute. Any discretionary indemnification under the Nevada Statute must be authorized upon a determination that such indemnification is proper: (i) by the stockholders, (ii) by a majority of a quorum of disinterested directors, or (iii) by independent legal counsel in a written opinion authorized by a majority vote of a quorum of directors consisting of disinterested directors or by independent legal counsel in a written opinion if a quorum of disinterested directors cannot be obtained.

The Articles of Incorporation and bylaws of Farm Fresh Foods, Inc. provide that the corporation shall indemnify all persons who, as a result of their service to the corporation in an official capacity, are made a party to any action, suit or proceeding to the fullest extent provided by the Nevada Statute.

Registrants Incorporated Under New Jersey Law

Papetti Electroheating Corporation is incorporated under the laws of the State of New Jersey. Section 14A:3-5 of the New Jersey Business Corporation Act (the “New Jersey Statute”) provides that a New Jersey

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corporation has the power to indemnify a director or officer against his or her expenses and liabilities in connection with any proceeding involving the director or officer by reason of his or her being or having been such a director or officer, other than a proceeding by or in the right of the corporation, if such director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal proceeding, such director or officer had no reasonable cause to believe his or her conduct was unlawful. For a proceeding by or in the right of a corporation, the New Jersey Statute provides that the corporation has the power to indemnify a director or officer against his or her expenses in such a proceeding involving the director or officer by reason of his or her being or having been such a director or officer, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation. However, in such proceeding no indemnification shall be provided with respect to any claim, issue or matter as to which such director or officer shall have been adjudged to be liable to the corporation, unless and only to the extent that the court shall determine upon application that despite the adjudication of liability such director of officer is entitled to indemnity for such expenses the court shall deem proper. The New Jersey Statute provides that any indemnification of a director or officer (or, in the case of indemnification in connection with an action by or in the right of a corporation, unless ordered by a court), unless otherwise provided in the certificate of incorporation or bylaws, must be authorized upon a determination that such indemnification is proper: (i) by the board of directors or a committee thereof, acting by a majority vote of a quorum of disinterested directors, (ii) if such a quorum is not obtainable, or, even if obtainable and such quorum of the board of directors or committee by a majority vote of the disinterested directors so directs, by independent legal counsel, in a written opinion, such counsel to be designated by the board of directors, or (iii) by the shareholders if the certificate of incorporation or bylaws or a resolution of the board of directors or of the shareholders so directs.

The New Jersey Statute further provides that a corporation must indemnify a director or officer against expenses to the extent that such director or officer has been successful on the merits or otherwise in any proceeding or in defense of any claim, issue or matter therein. The indemnification and advancement of expenses shall not exclude any other rights, including the right to be indemnified against liabilities and expenses incurred in proceedings by or in the right of the corporation, to which a director or officer may be entitled under a certificate of incorporation, bylaw, agreement, vote of shareholders, or otherwise; provided, that no indemnification shall be made to or on behalf of a director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his or her acts or omissions (i) were in breach of his or her duty of loyalty to the corporation or its shareholders, (ii) were not in good faith or involved a knowing violation of law, or (iii) resulted in receipt by the director or officer of an improper personal benefit. The New Jersey Statute also provides that a corporation may purchase and maintain insurance for officers and directors against liabilities incurred while acting in such capacities regardless of whether the corporation has the power to indemnify such persons under the New Jersey Statute.

The Certificate of Incorporation of Papetti Electroheating Corporation provides that the corporation will indemnify any and all corporate agents to the fullest extent provided by the New Jersey Statute. The bylaws do not include indemnification provisions.

Registrants Incorporated Under Wisconsin Law

WFC, Inc. is incorporated and Wisco Farm Cooperative is organized under the laws of the State of Wisconsin. Sections 180.0850 to 180.0859 of the Wisconsin Corporate Statute (the “Wisconsin Statute”) require a corporation to indemnify any director or officer who is a party to any threatened, pending or completed proceeding, to the extent the director or officer has been successful on the merits or otherwise in the defense of the proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the corporation. If the director or officer is not successful in defense of the proceeding, a corporation must indemnify the director or officer unless the liability was incurred as a result of the breach or failure to perform a duty which the director or officer owes to the corporation and the breach or failure to perform constitutes: (i) a willful failure to deal fairly with the corporation or its shareholders in

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connection with a matter in which the director or officer has a material conflict of interest, (ii) a violation of criminal law, unless the person has reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful, (iii) a transaction from which the person derived an improper personal profit, or (iv) willful misconduct. A corporation’s articles of incorporation may limit its obligation to indemnify under these provisions. The Wisconsin Statute also provides that a corporation may purchase and maintain insurance for officers and directors against liabilities incurred while acting in such capacities whether or not the corporation would be empowered to indemnify such persons under the Wisconsin Statute.

Subject to certain exceptions, the director or officer seeking indemnification must select one of the following means for determining his or her right to indemnification: (i) by a majority vote of a quorum of the board of directors consisting of disinterested directors, or if a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the board of directors and consisting solely of 2 or more disinterested directors, (ii) by independent legal counsel selected by a quorum of the board of directors or its committee in the manner prescribed in clause (i) above, or, if unable to obtain such a quorum or committee, by a majority vote of the full board of directors, including directors who are parties to the same or related proceedings, (iii) by a panel of three arbitrators consisting of one arbitrator selected by those directors entitled under clause (ii) above to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the two arbitrators previously selected; (iv) by an affirmative vote of shares as provided in Section 180.0725 of the Wisconsin Statute, (v) by a court under Section 180.0854 of the Wisconsin Statute, or (vi) by any other method provided for in any additional right to indemnification permitted under the Wisconsin Statute (i.e., pursuant to articles or bylaws, a written agreement, or resolution of the directors or shareholders in accordance with the Wisconsin Statute).

Sections 185.034 to 185.042 of the Wisconsin Cooperatives Statute contains indemnification provisions for directors and officers of a cooperative mirroring the indemnification provisions in the Wisconsin Statute.

The Articles of Incorporation of WFC, Inc. provide for indemnification of its directors and officers to the fullest extent provided by the Wisconsin Statute, and for all money damages for breach of a fiduciary duty except for those resulting from willful failure to deal fairly with the corporation in connection with a matter in which the director or officer has a material conflict of interest or where the director or officer has violated criminal law, unless the director or officer had no reasonable cause to believe his activities were unlawful, the director or officer received an improper personal benefit or the director or officer committed willful misconduct. The bylaws of WFC, Inc. provide that directors and officers are entitled to indemnification to the fullest extent provided by the Wisconsin Statute, provided that a determination shall have been made by a disinterested quorum of directors, independent legal counsel, or the stockholders that the director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and with respect to any criminal matter, had no reasonable cause to believe his or her conduct was unlawful.

The articles and bylaws of Wisco Farm Cooperative do not include any provisions regarding the indemnification of its officers or directors.

Item 21. Exhibits.

(a) The following exhibits are filed as part of this Registration Statement or incorporated by reference herein:

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated October 10, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co., M-Foods Holdings, Inc. and certain shareholders of M-Foods Holdings, Inc.(1)
*2.2	Letter Agreement, dated October 17, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co. and M-Foods Holdings, Inc.

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Exhibit No.	Description
*2.3	Letter Agreement, dated October 24, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co. and M-Foods Holdings, Inc.
*2.4	Letter Agreement, dated November 17, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co. and M-Foods Holdings, Inc.
3.1	Amended and Restated Certificate of Incorporation of Michael Foods, Inc. (formerly known as M-Foods Holdings, Inc.)
3.2	Certificate of Merger of THL Food Products Co. with and into M-Foods Holdings, Inc., dated November 20, 2003
3.3	Agreement and Plan of Merger, dated November 20, 2003, by and among M-Foods Holdings, Inc. and Michael Foods, Inc.
3.4	Certificate of Merger of Michael Foods, Inc. with and into M-Foods Holdings, Inc., dated November 20, 2003
3.5	Bylaws of Michael Foods, Inc. (formerly known as M-Foods Holdings, Inc.)
3.6	Amended and Restated Certificate of Incorporation of Michael Foods of Delaware, Inc. (formerly known as Michael Foods, Inc.) (2)
3.7	Bylaws of Michael Foods of Delaware, Inc. (formerly known as Michael Foods, Inc.) (2)
3.8	Articles of Incorporation of WFC, Inc. (2)
3.9	Bylaws of WFC, Inc. (2)
3.10	Third Amended Articles of Incorporation of Wisco Farm Cooperative (2)
3.11	Second Amended and Restated Bylaws of Wisco Farm Cooperative (2)
3.12	Articles of Incorporation of Crystal Farms Refrigerated Distribution Company (formerly known as Michael Foods Refrigerated Distribution Company) (2)
3.13	Bylaws of Crystal Farms Refrigerated Distribution Company (formerly known as Michael Foods Refrigerated Distribution Company) (2)
3.14	Articles of Incorporation of Northern Star Co. (formerly known as Minnesota Products, Inc.) (2)
3.15	Bylaws of Northern Star Co. (formerly known as Minnesota Products, Inc.) (2)
3.16	Articles of Incorporation of Minnesota Products, Inc. (formerly known as TCW Corporation) (2)
3.17	Bylaws of Minnesota Products, Inc. (formerly known as TCW Corporation) (2)
3.18	Articles of Incorporation of Farm Fresh Foods, Inc. (formerly known as Farm Fresh Foods of Nevada, Inc.) (2)
3.19	Bylaws of Farm Fresh Foods, Inc. (formerly known as Farm Fresh Foods of Nevada, Inc.) (2)
3.20	Articles of KMS Dairy, Inc. (formerly known as Kohler Mix Specialties, Inc.) (2)
3.21	Bylaws of KMS Dairy, Inc. (formerly known as Kohler Mix Specialties, Inc.) (2)
3.22	Articles of Incorporation of M. G. Waldbaum Company (2)
3.23	Bylaws of M. G. Waldbaum Company (3)
3.24	Articles of Incorporation of Papetti’s Hygrade Food Products, Inc. (formerly known as Papetti’s Acquisition, Inc.) (2)

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Exhibit No.	Description
3.25	Bylaws of Papetti’s Hygrade Food Products, Inc. (formerly known as Papetti’s Acquisition, Inc.) (2)
3.26	Articles of Incorporation of Papetti Electroheating Corporation (2)
3.27	Bylaws of Papetti Electroheating Corporation (2)
3.28	Articles of Incorporation of Casa Trucking, Inc. (2)
3.29	Bylaws of Casa Trucking, Inc. (2)
4.1	Indenture, dated March 27, 2000, between Michael Foods Acquisition Corp. and BNY Midwest Trust Company, as trustee (3)
4.2	Supplemental Indenture, dated as of April 10, 2001, by and among Michael Foods, Inc., M-Foods Holdings, Inc., Michael Foods of Delaware, Inc., Northern Star Co., Minnesota Products, Inc., Farm Fresh Foods of Nevada, Inc., Crystal Farms Refrigerated Distribution Company, WFC, Inc., Wisco Farm Cooperative, M. G. Waldbaum Company, Papetti’s Hygrade Egg Products, Inc., Casa Trucking, Inc., Papetti Electroheating Corporation, Kohler Mix Specialties, Inc., Midwest Mix, Inc., Kohler Mix Specialties of Connecticut, Inc. and BNY Midwest Trust Company, as trustee (3)
4.3	Fourth Supplemental Indenture, dated as of October 31, 2003, by and among Michael Foods, Inc. and BNY Midwest Trust Company
4.4	Collateral Pledge and Security Agreement, dated March 27, 2001, between Michael Foods Acquisition Corp., and Banc of America Securities, LLC and Bear, Stearns & Co. and BNY Midwest Trust Company as collateral agent and securities intermediary (3)
4.5	Indenture, dated November 20, 2003, among Michael Foods, Inc., the Guarantors party thereto and Wells Fargo Bank Minnesota, National Association, as trustee
4.6	Registration Rights Agreement, dated November 20, 2003, among Michael Foods, Inc., the Subsidiary Guarantors party thereto and Banc of America Securities LLC, Deutsche Bank Securities Inc. and UBS Securities LLC
*5.1	Opinion of Weil, Gotshal & Manges LLP regarding the validity of the securities offered hereby
10.1	Credit Agreement dated as of November 20, 2003, among THL Food Products Co., as Borrower, THL Food Products Holding Co., Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto, Banc of America Securities LLC and Deutsche Bank Securities Inc., as Joint Lead Arrangers and Joint Book Managers, Deutsche Bank Securities Inc. and UBS Securities LLC, as Co-Syndication Agents, and General Electric Capital Corporation and Cooperative Centrale Raiffeisen – Boerenleenbank B.A., “Rabobank International,” New York Branch, as Co-Documentation Agents
10.2	Senior Unsecured Term Loan Agreement dated as of November 20, 2003, among THL Food Products Co., as Borrower, THL Food Products Holding Co., Bank of America, N.A., as Administrative Agent, the lenders party thereto, Bank of America Securities LLC and Deutsche Bank Securities, Inc., as Joint Lead Arrangers and Joint Book Managers, and Deutsche Bank Securities Inc. and UBS Securities LLC, as Co-Syndication Agents
*10.3	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and Gregg A. Ostrander
*10.4	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and John D. Reedy
*10.5	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and James D. Clarkson

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Exhibit No.	Description
*10.6	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and James Mohr
*10.7	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and Max R. Hoffmann
*10.8	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and Gregg A. Ostrander
*10.9	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and John D. Reedy
*10.10	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and James D. Clarkson
*10.11	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and James Mohr
*10.12	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and Max R. Hoffmann
*10.13	Stock Option Agreement, dated November 20, 2003, between Gregg A. Ostrander and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.14	Stock Option Agreement, dated November 20, 2003, between John D. Reedy and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.15	Stock Option Agreement, dated November 20, 2003, between James D. Clarkson and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.16	Stock Option Agreement, dated November 20, 2003, between James Mohr and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.17	Stock Option Agreement, dated November 20, 2003, between Max R. Hoffmann and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.18	THL Food Products Holding Co. Stock Option Plan
*10.19	Management Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and THL Managers V, LLC
*10.20	Securityholders Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and the other parties thereto
*10.21	Amended and Restated Limited Liability Company Agreement of Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC), dated November 20, 2003, between THL-MF Investors, LLC and the other parties thereto
*10.22	Subscription and Share Purchase Agreement, dated November 20, 2003, between M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.) and Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC)
10.23	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc., as successor to Michael Foods, Inc., a Delaware corporation and A&A Urban Renewal, relating to the lease of a facility located at 100 Trumbell St., Elizabeth, NJ (4)
10.24	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc., as successor to Michael Foods, Inc., a Delaware corporation, and Papetti Holding Company, et al., relating to the lease of a facility located at 877-879 E. North Ave., Elizabeth, NJ (4)
10.25	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc., as successor to Michael Foods, Inc., a Delaware corporation, and Papetti Holding Company, relating to the lease of a facility located at 847-855 E. North Ave., Elizabeth, NJ (4)

II-9

Exhibit No.	Description
10.26	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc. as successor to Michael Foods, Inc., a Delaware corporation, and Jersey Pride Urban Renewal, relating to the lease of a facility located at One Papetti Plaza, Elizabeth, NJ (4)
10.27	North Carolina State University Consolidated, Restated and Amended License Agreement, dated June 9, 2000, by and between North Carolina State University and the Company (5)
12.1	Computation of ratio of earnings to fixed charges
21.1	Subsidiaries of Michael Foods, Inc.
23.1	Consent of Grant Thornton LLP
23.2	Consent of PricewaterhouseCoopers LLP
*23.3	Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
24.1	Power of Attorney (included on the signature pages hereto)
25.1	Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939 of Wells Fargo Bank Minnesota, National Association
*99.1	Form of Letter of Transmittal
*99.2	Form of Notice of Guaranteed Delivery
*99.3	Form of letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
*99.4	Form of Letter to Beneficial Holders

(1) Incorporated by reference from the Company’s current report on Form 8-K filed with the Commission on October 16, 2003.

(2) Incorporated by reference from the Company’s registration statement on Form S-4 (Registration No. 333-63722) filed with the Commission on June 22, 2001.

(3) Incorporated by reference from Amendment No. 1 to the Company’s registration statement on Form S-4 (Registration No. 333-63722) filed with the Commission on July 18, 2001.

(4) Incorporated by reference from the Company’s current report on Form 8-K filed with the Commission on November 22, 2000.

(5) Incorporated by reference from the Company’s quarterly report on Form 10-Q filed with the Commission on November 22, 2000.

 * To be filed by amendment.

II-10

Item 22. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrants hereby undertake:

(1) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(2) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(A) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.

(B) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(C) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(3) That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(4) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the exchange offer.

(5) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of the receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

II-11

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Michael Foods, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

MICHAEL FOODS, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Executive Vice President and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    GREGG A. OSTRANDER         Gregg A. Ostrander	President, Chief Executive Officer and Chairman of the Board of Directors (principal executive officer and director)
/s/    JOHN D. REEDY         John D. Reedy	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)
/s/    TODD M. ABBRECHT         Todd M. Abbrecht	Director
/s/    ANTHONY J. DINOVI         Anthony J. DiNovi	Director
/s/    JEROME J. JENKO         Jerome J. Jenko	Director
/s/    KENT R. WELDON         Kent R. Weldon	Director

II-12

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Michael Foods of Delaware, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

MICHAEL FOODS OF DELAWARE, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-13

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, M. G. Waldbaum Company has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

M. G. WALDBAUM COMPANY
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-14

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Papetti’s Hygrade Egg Products, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

PAPETTI’S HYGRADE EGG PRODUCTS, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-15

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Papetti Electroheating Corporation has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

PAPETTI ELECTROHEATING CORPORATION
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-16

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Casa Trucking, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

CASA TRUCKING, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-17

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Crystal Farm Refrigerated Distribution Company has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

CRYSTAL FARMS REFRIGERATED DISTRIBUTION COMPANY
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-18

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, WFC, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

WFC, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-19

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Wisco Farm Cooperative has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

WISCO FARM COOPERATIVE
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander
/s/    MARK D. WITMER	Director
Mark D. Witmer

II-20

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Northern Star Co. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

NORTHERN STAR CO.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-21

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Minnesota Products, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

MINNESOTA PRODUCTS, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-22

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Farm Fresh Foods, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

FARM FRESH FOODS, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/     GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-23

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, KMS Dairy, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minnetonka, State of Minnesota, on the 11th day of February, 2004.

KMS DAIRY, INC.
By:	/s/    JOHN D. REEDY
	John D. Reedy
	Vice President Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregg A. Ostrander and John D. Reedy, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and power of attorney have been signed by the following persons in the capacities indicated on the 11th day of February, 2004.

Signature	Title
/s/    JOHN D. REEDY	Vice President Finance and Director
John D. Reedy
/s/    GREGG A. OSTRANDER	Director
Gregg A. Ostrander

II-24

EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated October 10, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co., M-Foods Holdings, Inc. and certain shareholders of M-Foods Holdings, Inc.(1)
*2.2	Letter Agreement, dated October 17, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co. and M-Foods Holdings, Inc.
*2.3	Letter Agreement, dated October 24, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co. and M-Foods Holdings, Inc.
*2.4	Letter Agreement, dated November 17, 2003, by and among M-Foods Investors, LLC, THL Food Products Holdings Co., THL Food Products Co. and M-Foods Holdings, Inc.
3.1	Amended and Restated Certificate of Incorporation of Michael Foods, Inc. (formerly known as M-Foods Holdings, Inc.)
3.2	Certificate of Merger of THL Food Products Co. with and into M-Foods Holdings, Inc., dated November 20, 2003
3.3	Agreement and Plan of Merger, dated November 20, 2003, by and among M-Foods Holdings, Inc. and Michael Foods, Inc.
3.4	Certificate of Merger of Michael Foods, Inc. with and into M-Foods Holdings, Inc., dated November 20, 2003
3.5	Bylaws of Michael Foods, Inc. (formerly known as M-Foods Holdings, Inc.)
3.6	Amended and Restated Certificate of Incorporation of Michael Foods of Delaware, Inc. (formerly known as Michael Foods, Inc.) (2)
3.7	Bylaws of Michael Foods of Delaware, Inc. (formerly known as Michael Foods, Inc.) (2)
3.8	Articles of Incorporation of WFC, Inc. (2)
3.9	Bylaws of WFC, Inc. (2)
3.10	Third Amended Articles of Incorporation of Wisco Farm Cooperative (2)
3.11	Second Amended and Restated Bylaws of Wisco Farm Cooperative (2)
3.12	Articles of Incorporation of Crystal Farms Refrigerated Distribution Company (formerly known as Michael Foods Refrigerated Distribution Company) (2)
3.13	Bylaws of Crystal Farms Refrigerated Distribution Company (formerly known as Michael Foods Refrigerated Distribution Company) (2)
3.14	Articles of Incorporation of Northern Star Co. (formerly known as Minnesota Products, Inc.) (2)
3.15	Bylaws of Northern Star Co. (formerly known as Minnesota Products, Inc.) (2)
3.16	Articles of Incorporation of Minnesota Products, Inc. (formerly known as TCW Corporation) (2)
3.17	Bylaws of Minnesota Products, Inc. (formerly known as TCW Corporation) (2)
3.18	Articles of Incorporation of Farm Fresh Foods, Inc. (formerly known as Farm Fresh Foods of Nevada, Inc.) (2)
3.19	Bylaws of Farm Fresh Foods, Inc. (formerly known as Farm Fresh Foods of Nevada, Inc.) (2)
3.20	Articles of KMS Dairy, Inc. (formerly known as Kohler Mix Specialties, Inc.) (2)
3.21	Bylaws of KMS Dairy, Inc. (formerly known as Kohler Mix Specialties, Inc.) (2)

Exhibit No.	Description
3.22	Articles of Incorporation of M. G. Waldbaum Company (2)
3.23	Bylaws of M. G. Waldbaum Company (3)
3.24	Articles of Incorporation of Papetti’s Hygrade Food Products, Inc. (formerly known as Papetti’s Acquisition, Inc.) (2)
3.25	Bylaws of Papetti’s Hygrade Food Products, Inc. (formerly known as Papetti’s Acquisition, Inc.) (2)
3.26	Articles of Incorporation of Papetti Electroheating Corporation (2)
3.27	Bylaws of Papetti Electroheating Corporation (2)
3.28	Articles of Incorporation of Casa Trucking, Inc. (2)
3.29	Bylaws of Casa Trucking, Inc. (2)
4.1	Indenture, dated March 27, 2000, between Michael Foods Acquisition Corp. and BNY Midwest Trust Company, as trustee (3)
4.2	Supplemental Indenture, dated as of April 10, 2001, by and among Michael Foods, Inc., M-Foods Holdings, Inc., Michael Foods of Delaware, Inc., Northern Star Co., Minnesota Products, Inc., Farm Fresh Foods of Nevada, Inc., Crystal Farms Refrigerated Distribution Company, WFC, Inc., Wisco Farm Cooperative, M. G. Waldbaum Company, Papetti’s Hygrade Egg Products, Inc., Casa Trucking, Inc., Papetti Electroheating Corporation, Kohler Mix Specialties, Inc., Midwest Mix, Inc., Kohler Mix Specialties of Connecticut, Inc. and BNY Midwest Trust Company, as trustee (3)
4.3	Fourth Supplemental Indenture, dated as of October 31, 2003, by and among Michael Foods, Inc. and BNY Midwest Trust Company
4.4	Collateral Pledge and Security Agreement, dated March 27, 2001, between Michael Foods Acquisition Corp., and Banc of America Securities, LLC and Bear, Stearns & Co. and BNY Midwest Trust Company as collateral agent and securities intermediary (3)
4.5	Indenture, dated November 20, 2003, among Michael Foods, Inc., the Guarantors party thereto and Wells Fargo Bank Minnesota, National Association, as trustee
4.6	Registration Rights Agreement, dated November 20, 2003, among Michael Foods, Inc., the Subsidiary Guarantors party thereto and Banc of America Securities LLC, Deutsche Bank Securities Inc. and UBS Securities LLC
*5.1	Opinion of Weil, Gotshal & Manges LLP regarding the validity of the securities offered hereby
10.1	Credit Agreement dated as of November 20, 2003, among THL Food Products Co., as Borrower, THL Food Products Holding Co., Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto, Banc of America Securities LLC and Deutsche Bank Securities Inc., as Joint Lead Arrangers and Joint Book Managers, Deutsche Bank Securities Inc. and UBS Securities LLC, as Co-Syndication Agents, and General Electric Capital Corporation and Cooperative Centrale Raiffeisen – Boerenleenbank B.A., “Rabobank International,” New York Branch, as Co-Documentation Agents
10.2	Senior Unsecured Term Loan Agreement dated as of November 20, 2003, among THL Food Products Co., as Borrower, THL Food Products Holding Co., Bank of America, N.A., as Administrative Agent, the lenders party thereto, Bank of America Securities LLC and Deutsche Bank Securities, Inc., as Joint Lead Arrangers and Joint Book Managers, and Deutsche Bank Securities Inc. and UBS Securities LLC, as Co-Syndication Agents

Exhibit No.	Description
*10.3	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and Gregg A. Ostrander
*10.4	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and John D. Reedy
*10.5	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and James D. Clarkson
*10.6	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and James Mohr
*10.7	Employment Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and Max R. Hoffmann
*10.8	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and Gregg A. Ostrander
*10.9	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and John D. Reedy
*10.10	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and James D. Clarkson
*10.11	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and James Mohr
*10.12	Senior Management Unit Subscription Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and Max R. Hoffmann
*10.13	Stock Option Agreement, dated November 20, 2003, between Gregg A. Ostrander and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.14	Stock Option Agreement, dated November 20, 2003, between John D. Reedy and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.15	Stock Option Agreement, dated November 20, 2003, between James D. Clarkson and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.16	Stock Option Agreement, dated November 20, 2003, between James Mohr and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.17	Stock Option Agreement, dated November 20, 2003, between Max R. Hoffmann and M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.)
*10.18	THL Food Products Holding Co. Stock Option Plan
*10.19	Management Agreement, dated November 20, 2003, by and among Michael Foods, Inc. and THL Managers V, LLC
*10.20	Securityholders Agreement, dated November 20, 2003, between Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC) and the other parties thereto
*10.21	Amended and Restated Limited Liability Company Agreement of Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC), dated November 20, 2003, between THL-MF Investors, LLC and the other parties thereto
*10.22	Subscription and Share Purchase Agreement, dated November 20, 2003, between M-Foods Holdings, Inc. (formerly known as THL Food Products Holding Co.) and Michael Foods Investors, LLC, (formerly known as THL-MF Investors, LLC)

Exhibit No.	Description
10.23	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc., as successor to Michael Foods, Inc., a Delaware corporation and A&A Urban Renewal, relating to the lease of a facility located at 100 Trumbell St., Elizabeth, NJ (4)
10.24	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc., as successor to Michael Foods, Inc., a Delaware corporation, and Papetti Holding Company, et al., relating to the lease of a facility located at 877-879 E. North Ave., Elizabeth, NJ (4)
10.25	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc., as successor to Michael Foods, Inc., a Delaware corporation, and Papetti Holding Company, relating to the lease of a facility located at 847-855 E. North Ave., Elizabeth, NJ (4)
10.26	Lease, dated as of February 26, 1997, by and between Michael Foods of Delaware, Inc. as successor to Michael Foods, Inc., a Delaware corporation, and Jersey Pride Urban Renewal, relating to the lease of a facility located at One Papetti Plaza, Elizabeth, NJ (4)
10.27	North Carolina State University Consolidated, Restated and Amended License Agreement, dated June 9, 2000, by and between North Carolina State University and the Company (5)
12.1	Computation of ratio of earnings to fixed charges
21.1	Subsidiaries of Michael Foods, Inc.
23.1	Consent of Grant Thornton LLP
23.2	Consent of PricewaterhouseCoopers LLP
*23.3	Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
24.1	Power of Attorney (included on the signature pages hereto)
25.1	Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939 of Wells Fargo Bank Minnesota, National Association
*99.1	Form of Letter of Transmittal
*99.2	Form of Notice of Guaranteed Delivery
*99.3	Form of letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
*99.4	Form of Letter to Beneficial Holders

(1) Incorporated by reference from the Company’s current report on Form 8-K filed with the Commission on October 16, 2003.

(2) Incorporated by reference from the Company’s registration statement on Form S-4 (Registration No. 333-63722) filed with the Commission on June 22, 2001.

(3) Incorporated by reference from Amendment No. 1 to the Company’s registration statement on Form S-4 (Registration No. 333-63722) filed with the Commission on July 18, 2001.

(4) Incorporated by reference from the Company’s current report on Form 8-K filed with the Commission on November 22, 2000.

(5) Incorporated by reference from the Company’s quarterly report on Form 10-Q filed with the Commission on November 22, 2000.

 * To be filed by amendment.

EX-3.1

                                                                     Exhibit 3.1

                                                                          PAGE 1

                                    Delaware

                                 The First State

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS FILED
FROM AND INCLUDING THE RESTATED CERTIFICATE OF "M-FOODS HOLDINGS, INC." AS
RECEIVED AND FILED IN THIS OFFICE.

     THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:

     RESTATED CERTIFICATE, FILED THE SIXTH DAY OF APRIL, A.D. 2001, AT 9 O'CLOCK
A.M.

     CERTIFICATE OF AMENDMENT, FILED THE TWENTY-SECOND DAY OF AUGUST, A.D. 2002,
AT 9 O'CLOCK A.M.

     CERTIFICATE OF AMENDMENT, FILED THE FOURTEENTH DAY OF OCTOBER, A.D. 2003,
AT 10:31 O'CLOCK A.M.


                                             /s/ Harriet Smith Windsor
           [SEAL State of Delaware]          -----------------------------------
                                                 Harriet Smith Windsor,
                                                 Secretary of State

                                                 AUTHENTICATION: 2742673

                                                          DATE: 11-12-03




   STATE OF DELAWARE
   SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/06/2001
   010171071 - 3316564

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                             M-FOODS HOLDINGS, INC.

     M-Foods Holdings, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, hereby amends
and restates its certificate of incorporation to read as follows (the date of
filing of the original Certificate of Incorporation of M-Foods Holdings, Inc.
being December 13,2000):

     This Amended and Restated Certificate of Incorporation amends and restates
the Certificate of Incorporation of M-Foods Holdings, Inc. (the "Corporation")
as now in effect. This Amended and Restated Certificate of Incorporation was
duly adopted by the board of directors in the manner prescribed by Sections 241
and 245 of the General Corporation Law of the State of Delaware (the Corporation
has not received any payment for any stock).

                                   ARTICLE ONE

          The name of the corporation is M-Foods Holdings, Inc.

                                   ARTICLE TWO

          The address of the corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
19801. The name of its registered agent at such address is The Corporation Trust
Company.

                                  ARTICLE THREE

          The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.



                                  ARTICLE FOUR

                              A. Authorized Shares

          The total number of shares of stock which the corporation has
authority to issue is 501,000 shares, consisting of:

          (1)  1,000 shares of Preferred Stock, par value $0.01 per share (the
               "Preferred Stock"); and

          (2)  500,000 shares of Common Stock, par value $0.01 per share (the
               "Common Stock").

                               B. Preferred Stock

          Shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of the Corporation is hereby authorized to
determine and alter all rights, preferences and privileges and qualifications,
limitations and restrictions thereof (including, without limitation, voting
rights and the limitation and exclusion thereof) granted to or imposed upon any
wholly unissued series of Preferred Stock and the number of shares constituting
any such series and the designation thereof, and to increase or decrease (but
not below the number of shares of such series then outstanding) the number of
shares of any series subsequent to the issue of shares of that series then
outstanding. In the event that the number of shares of any series is so
decreased, the shares constituting such reduction shall resume the status which
such shares had prior to the adoption of the resolution originally fixing the
number of shares of such series.

                                  ARTICLE FIVE

          The corporation is to have perpetual existence.

                                   ARTICLE SIX

          In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.

                                       -2-



                                  ARTICLE SEVEN

          Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.

                                  ARTICLE EIGHT

          To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHT shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.

                                  ARTICLE NINE

          The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.

                                   ARTICLE TEN

          The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.

                                    * * * * *

                                       -3-



          IN WITNESS WHEREOF, the undersigned, for the purpose of restating and
integrating and further amending the Amended and Restated Certificate of
Incorporation pursuant to the General Corporation Law of the State of Delaware,
under penalty of perjury does hereby declare and certify that this is the act
and deed of the Corporation and the facts stated herein are true, and
accordingly has hereunto signed this Certificate of Amended and Restated
Certificate of Incorporation this 6th day of April, 2001.

                                             M-FOODS HOLDINGS, INC.,
                                             a Delaware corporation


                                             By: /s/ James P. Kelley
                                                 -------------------------------
                                             Name: James P. Kelley
                                             Title: President



                                                           STATE OF DELAWARE
                                                          SECRETARY OF STATE
                                                       DIVISION OF CORPORATIONS
                                                       FILED 09:00 AM 08/22/2002
                                                          020531542 - 3316564

                            CERTIFICATE OF AMENDMENT

                                       TO

                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                             M-FOODS HOLDINGS, INC.

                                    * * * * *

                    Adopted in accordance with the provisions
                    of (S)242 of the General Corporation Law
                            of the State of Delaware

                                    * * * * *

          The undersigned, on behalf of M-FOODS HOLDINGS, INC., a corporation
duly organized and existing under and by virtue of the General Corporation Law
of the State of Delaware (the "Corporation"), does hereby certify as follows:

          FIRST: That the Certificate of Incorporation of the Corporation be,
and hereby is, amended by deleting Article Four (A) in its entirety and
substituting in lieu thereof a new Article Four (A) to read as follows:

                              "A. Authorized Shares

          The total number of shares of stock which the corporation has
authority to issue is 506,000 shares, consisting of:

          (1)  1,000 shares of Preferred Stock, par value $0.01 per share (the
               "Preferred Stock"); and

          (2)  505,000 shares of Common Stock, par value $0.01 per share (the
               "Common Stock")."



          SECOND: The Board of Directors of the Corporation authorized the
amendment to the Amended and Restated Certificate of Incorporation of the
Corporation (the "Amendment") set forth above and directed that the Amendment be
submitted to the holders of the issued and outstanding shares of capital stock
of the Corporation entitled to vote thereon for their consideration and
approval.

          THIRD: That the stockholders entitled to vote thereon approved the
foregoing amendment by written consent in accordance with Section 228 and 242 of
the General Corporation Law of the State of Delaware.

                                      *****



          IN WITNESS WHEREOF, the undersigned does hereby certify under
penalties of perjury that this Certificate of Amendment to the Amended and
Restated Certificate of Incorporation of the Corporation is the act and deed of
the undersigned and the facts stated herein are true and accordingly has
hereunto set his hand this 21stday of August, 2002.

                                        M-FOODS HOLDINGS, INC.,
                                        a Delaware Corporation


                                        By: /s/ Gregg Ostrander
                                            ------------------------------------
                                        Name: Gregg Ostrander
                                        Its: Chairman, President & CEO



                                                         State of Delaware
                                                         Secretary of State
                                                      Division of Corporations
                                                   Delivered 10:47 AM 10/14/2003
                                                     FILED 10:31 AM 10/14/2003
                                                    SRV 030657629 - 3316564 FILE

                            CERTIFICATE OF AMENDMENT

                                       TO

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                             M-FOODS HOLDINGS, INC.

                                     * * * *

           Adopted in accordance with the provisions of (S)242 of the

                General Corporation Law of the State of Delaware

                                     * * * *

          Gregg A. Ostrander, being the President and CEO of M-Foods Holdings,
Inc., a corporation duly organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY as follows:

          FIRST: The Board of Directors of the Corporation has adopted an
amendment to the Amended and Restated Certificate of Incorporation of the
Corporation that replaces Article FOUR of the Amended and Restated Certificate
of Incorporation of the Corporation in its entirety with the attached Exhibit A
(the "Amendment"), and has directed that the Amendment be submitted to the
holders of the issued and outstanding shares of the Common Stock of the
Corporation entitled to vote thereon for its consideration and approval.

          SECOND: The Amendment was duly adopted in accordance with (S)228 and
(S)242 of the General Corporation Law of the State of Delaware by the holders of
the issued and outstanding shares of the Common Stock of the Corporation
entitled to vote thereon. Written



notice has been given to the holders of the issued and outstanding shares of the
Common Stock of the Corporation who have not consented in writing to the
Amendment.

                                   * * * * * *

                                       -2-



          IN WITNESS WHEREOF, the undersigned does hereby certify under
penalties of perjury that this Certificate of Amendment to the Amended and
Restated Certificate of Incorporation of the Corporation is the act and deed of
the undersigned and the facts stated herein are true and accordingly has
hereunto set his hand this 14th day of October, 2003.

                                                    M-FOODS HOLDINGS, INC.,
                                                    a Delaware corporation


                                                    By: /s/ Gregg A. Ostrander
                                                        ------------------------
                                                            Gregg A. Ostrander
                                                            President and CEO

                                       -3-



                                                                       Exhibit A

                                  ARTICLE FOUR

Part A. Authorized Shares

          The total number of shares of capital stock which the Corporation has
authority to issue is 605,000 shares, consisting of:

          (i)  505,000 shares of Common Stock, par value $.01 per share ("Common
               Stock"); and

          (ii) 100,000 shares of Preferred Stock, par value $.01 per share
               ("Preferred Stock").

          The Preferred Stock shall have the rights, preferences and limitations
set forth in Part B. The Common Stock shall have the rights, preferences and
limitations set forth in Part C. Capitalized terms used but not otherwise
defined in Part A, Part B, or Part C of this Article Four are defined in Part D.

Part B. Powers, Preferences and Special Rights of the Preferred Stock

          Section 1. Dividends.

          1A. General Obligation. When and as declared by the Corporation's
Board of Directors and to the extent permitted under the General Corporation Law
of Delaware, the Corporation shall pay preferential dividends to the holders of
the Preferred Stock as provided in this Section 1. Dividends on each share (a
"Share") of the Preferred Stock shall accrue on a daily basis at the rate of 8%
per annum of the sum of the Liquidation Value thereof plus all accumulated and
unpaid dividends thereon from and including the date of issuance of such Share
to and including the first to occur of (i) the date on which the Liquidation
Value of such Share (plus all accrued and unpaid dividends thereon) is paid to
the holder thereof in connection with the liquidation of the Corporation or (ii)
the date on which such Share is otherwise acquired by the Corporation. Such
dividends shall accrue whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends. The date on which the Corporation initially issues
any Share shall be deemed to be its "date of issuance" regardless of the number
of times transfer of such Share is made on the stock records maintained by or
for the Corporation and regardless of the number of certificates which may be
issued to evidence such Share.

          1B. Dividend Reference Dates. To the extent not paid on March 31, June
30, September 30 and December 31 of each year, beginning September 30, 2003 (the
"Dividend Reference Dates"), all dividends which have accrued on each Share
outstanding during the three-month period (or other period in the case of the
initial Class A Dividend Reference Date) ending upon each such Dividend
Reference Date shall be accumulated and shall remain accumulated dividends with
respect to such Share until paid to the holder thereof.

                                       -4-



          1C. Distribution of Partial Dividend Payments. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Shares, such payment shall be
distributed pro rata among the holders thereof based upon the aggregate accrued
but unpaid dividends on the Shares held by each such holder.

          Section 2. Forfeiture of Preferred Stock.

          2A. Forfeiture. To the extent there are Shares outstanding, if the
Corporation or any of its Subsidiaries (including Michael Foods, Inc.) pays any
amounts pursuant to Section 1.4 or Article VI of that certain Securities
Purchase Agreement dated as of October 1, 2003, by and among Suiza Dairy
Group, Inc., a Delaware corporation, Michael Foods, Inc., a Minnesota
corporation, Michael Foods of Delaware, Inc., a Delaware corporation, Kohler Mix
Specialties, Inc., a Minnesota corporation, M-Foods Dairy Holdings, LLC, a
Delaware limited liability company, and Marathon Dairy, LLC, a Delaware
limited liability company (as the same may be amended, supplemented or
otherwise modified, the "Purchase Agreement"), then the Corporation  may, at
its option and at any time, cause the forfeiture, for no consideration, of a
number of Shares (including fractional portions thereof) with an aggregate
Preferred Value equal to 95% of the aggregate amount of the payments made
pursuant to Section 1.4 or Article VI of the Purchase Agreement, or such
lesser number of Shares then outstanding.

          2B. Provisions Relating to Forfeiture Generally.

               (a) Except as otherwise provided herein, the Corporation shall
mail written notice of forfeiture of Shares pursuant to Section 2A hereunder to
each record holder of Shares. Any forfeiture hereunder shall be deemed
effective, and such Shares shall be deemed forfeited, upon the mailing of such
notice, and Dividends shall no longer accrue with respect to any such forfeited
Shares after the date of such notice. Upon receipt of such notice, each such
holder shall, within five business days thereof, return to the Corporation the
certificate or certificates representing such holder's Shares. In case fewer
than the total number of Shares represented by any certificate are forfeited, a
new certificate representing the number of remaining Shares shall be issued to
the holder thereof without cost to such holder within five business days after
surrender of the certificate or certificates representing the forfeited Shares.

               (b) The number of Shares to be forfeited per each holder shall be
the number of Shares determined by multiplying the total number of such Shares
to be forfeited times a fraction, the numerator of which shall be the total
number of such Shares then held by such holder and the denominator of which
shall be the total number of such Shares then outstanding,

               (c) Any Shares which are forfeited by the Corporation shall be
canceled and retired to authorized but unissued Shares and shall not be
reissued, sold or transferred.

          Section 3. Redemption of Shares of Preferred Stock.

          3A. Redemption Right.

                                       -5-



               (a) Following the consummation of the Corporation's initial
Public Offering, the Corporation may at any time and from time to time redeem
all or any portion of the Shares then outstanding. Upon any such redemption, the
Corporation shall pay a price per Share equal to the Liquidation Value thereof
plus all accrued and unpaid dividends thereon.

               (b) If a Change in Ownership has occurred or the Corporation
obtains knowledge that a Change in Ownership is proposed to occur, the
Corporation shall give prompt written notice of such Change in Ownership
describing in reasonable detail the material terms and date of consummation
thereof to each holder of Shares, but in any event such notice shall not be
given later than five days after the occurrence of such Change in Ownership, and
the Corporation shall give each holder of Shares prompt written notice of any
material change in the terms or timing of such transaction. Any holder of Shares
then outstanding may require the Corporation to redeem all, but not less than
all, of the Shares owned by such holders at a price per Share equal to the
Liquidation Value thereof plus all accrued and unpaid dividends thereon by
giving written notice to the Corporation of such election prior to the later of
(a)21 days after receipt of the Corporation's notice and (b) five days prior to
the consummation of the Change in Ownership (the "Expiration Date").

               The term "Change in Ownership" means any sale, transfer or
issuance or series of sales, transfers and/or issuances of Common Stock by the
Corporation or any holders thereof which results in any Person or group of
Persons (as the term "group" is used under the Securities Exchange Act), other
than M-Foods Investors, LLC, a Delaware limited liability company, owning more
than 50% of the Common Stock outstanding at the time of such sale, transfer or
issuance or series of sales, transfers and/or issuances.

               Upon receipt of such election(s), the Corporation shall be
obligated to redeem all Shares on the later of (a) the occurrence of the Change
in Ownership or (b) five days after the Corporation's receipt of such
election(s). If any proposed Change in Ownership does not occur, all requests
for redemption in connection therewith shall be automatically rescinded, or if
there has been a material change in the terms or the timing of the transaction,
any holder of Shares may rescind such holder's request for redemption by
delivering written notice thereof to the Corporation prior to the consummation
of the transaction.

               (c) If a Fundamental Change is proposed to occur, the Corporation
shall give written notice of such Fundamental Change describing in reasonable
detail the material terms and date of consummation thereof to each holder of
Shares not more than 45 days nor less than 20 days prior to the consummation of
such Fundamental Change, and the Corporation shall give each holder of Shares
prompt written notice of any material change in the terms or timing of such
transaction. Any holder of Shares then outstanding may require the Corporation
to redeem all, but not less than all, of the Shares owned by such holders at a
price per Share equal to the Liquidation Value thereof plus all accrued and
unpaid dividends thereon by giving written notice to the Corporation of such
election prior to the later of (a) ten days prior to the consummation of the
Fundamental Change or (b) ten days after receipt of notice from the Corporation.

               The term "Fundamental Change" means (a) any sale or transfer of
more than 50% of the assets of the Corporation and its Subsidiaries on a
consolidated basis (measured

                                       -6-



either by book value in accordance with generally accepted accounting principles
consistently applied or by fair market value determined in the reasonable good
faith judgment of the Corporation's Board of Directors) in any transaction or
series of transactions (other than sales in the ordinary course of business) and
(b) any merger or consolidation to which the Corporation is a party, except for
a merger in which the Corporation is the surviving entity, the terms of the
Shares are not changed and the Shares are not exchanged for cash, securities or
other property, and after giving effect to such merger, the holders of the
Corporation's outstanding capital stock possessing a majority of the voting
power (under ordinary circumstances) to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors.

               Upon receipt of such election(s) the Corporation shall be
obligated to redeem all Shares upon the consummation of such Fundamental Change.
If any proposed Fundamental Change does not occur, all requests for redemption
in connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Shares may rescind such holder's request for redemption by delivering written
notice thereof to the Corporation prior to the consummation of the transaction.

          3B. Provisions Relating to Redemption Generally.

               (i) For each Share which is required to be redeemed hereunder,
the Corporation shall be obligated on the Redemption Date to pay to the holder
thereof (upon surrender by such holder at the Corporation's principal office of
the certificate representing such Share) an amount in immediately available
funds equal to the amounts required to effect such redemption as specified
herein. If the funds of the Corporation legally available for redemption of
Shares on any Redemption Date are insufficient to redeem the total number of
Shares to be redeemed on such date, those funds which are legally available
shall be used to redeem the maximum possible number of Shares pro rata among the
holders of the Shares to be redeemed based upon the aggregate Liquidation Value
of such Shares (plus all accrued and unpaid dividends thereon). At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of Shares, such funds shall immediately be used to redeem the
balance of the Shares which the Corporation has become obligated to redeem on
any Redemption Date but which it has not redeemed.

               (ii) Except as otherwise provided herein, the Corporation shall
mail written notice of each redemption of Shares to each record holder of such
class not more than 60 nor less than 15 days prior to the date on which such
redemption is to be made. In case fewer than the total number of Shares
represented by any certificate are redeemed, a new certificate representing the
number of unredeemed Shares, as applicable, shall be issued to the holder
thereof without cost to such holder within five business days after surrender of
the certificate representing the redeemed Shares.

               (iii) The number of Shares to be redeemed from each holder
thereof in redemptions hereunder shall be the number of Shares determined by
multiplying the total number of such Shares to be redeemed times a fraction, the
numerator of which shall be the total

                                       -7-



number of such Shares then held by such holder and the denominator of which
shall be the total number of such Shares then outstanding.

               (iv) Dividends shall no longer accrue with respect to any Share
after the date on which the Liquidation Value thereof plus all of the accrued
and unpaid dividends, as applicable, thereon, is paid to the holder of such
Share.

               (v) Any Shares which are redeemed or otherwise acquired by the
Corporation shall be canceled and retired to authorized but unissued Shares and
shall not be reissued, sold or transferred.

          Section 4. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (whether voluntary or involuntary), each holder shall be
entitled to be paid, before any distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation Value of all
Shares held by such holder (plus all accrued and unpaid dividends thereon), and
the holders of Shares shall not be entitled to any further payment. If upon any
such liquidation, dissolution or winding up of the Corporation the Corporation's
assets to be distributed among the holders of the Shares are insufficient to
permit payment to such holders of the aggregate amount which they are entitled
to be paid under this Section 4, then the entire assets available to be
distributed to the Corporation's stockholders shall be distributed pro rata
among such holders based upon the aggregate Liquidation Value (plus all accrued
and unpaid dividends) of the Shares held by each such holder. Not less than 60
days prior to the payment date stated therein, the Corporation shall mail
written notice of any such liquidation, dissolution or winding up to each
record holder of Shares, setting forth in reasonable detail the  amount of
proceeds to be paid with respect to each Share and each share of Common Stock in
connection with such liquidation, dissolution or winding up.

          Section 5. Priority of Shares on Dividends and Redemptions. So long as
any Share remains outstanding, without the prior written consent of the holders
of a majority of the outstanding Shares the Corporation shall not, nor shall it
permit any Subsidiary to, redeem, purchase or otherwise acquire directly or
indirectly any Junior Securities, nor shall the Corporation directly or
indirectly pay or declare any dividend or make any distribution upon any Junior
Securities; provided that the Corporation may repurchase shares of Common Stock
and Preferred Stock from present or former employees of the Company or its
Subsidiaries in accordance with the provisions of the Repurchase Agreements.

          Section 6. Voting Rights. Except as otherwise provided herein and as
otherwise required by applicable law, the Shares shall have no voting rights;
provided that each holder of Shares shall be entitled to notice of all
stockholders meetings at the same time and in the same manner as notice is given
to all stockholders entitled to vote at such meetings.

          Section 7. Registration of Transfer. The Corporation shall keep at its
principal office a register for the registration of the Shares. Upon the
surrender of any certificate representing Shares at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and

                                       -8-



shall represent such number of Shares as is requested by the holder of the
surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Shares represented by
such new certificate from the date to which dividends have been fully paid on
such Shares represented by the surrendered certificate.

          Section 8. Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing Shares, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and dividends
shall accrue on the Shares represented by such new certificate from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.

          Section 9. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision of this Part B
hereof without the prior written consent of the holders of a majority of the
Shares outstanding at the time such action is taken. No amendment to any
provision in Part D (Definitions) that adversely affects the Shares shall be
effective without the prior written consent of the holders of a majority of the
Shares outstanding at the time such action is taken.

          Section 10. Notices. Except as otherwise expressly provided hereunder,
all notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and shall be deemed to
have been given when so mailed or sent (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).

Part C. Powers, Preferences and Special Rights of the Common Stock.

          Except as otherwise provided in this Part C or as otherwise required
by applicable law, all shares of Common Stock, shall be identical in all
respects and shall entitle the holders thereof to the same rights and
privileges, subject to the same qualifications, limitations and restrictions.

          Section 1. Voting Rights. Except as otherwise provided in this Part C
or as otherwise required by applicable law, the holders of Common Stock shall be
entitled to one vote per share on all matters to be voted on by the stockholders
of the Corporation.

          Section 2. Dividends. As and when dividends are declared or paid with
respect to shares of Common Stock, whether in cash, property or securities of
the Corporation, the holders of Common Stock shall be entitled to receive such
dividends pro rata at the same rate

                                       -9-



per share. The rights of the holders of Common Stock to receive dividends are
subject to the provisions of the Shares.

          Section 3. Liquidation. Subject to the provisions of the Shares, the
holders of the Common Stock shall be entitled to participate pro rata at the
same rate per share in all distributions to the holders of Common Stock in any
liquidation, dissolution or winding up of the Corporation.

          Section 4. Registration of Transfer. The Corporation shall keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender of
any certificate representing shares of any class of Common Stock at such place,
the Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares of such class represented by the surrendered certificate and the
Corporation shall forthwith cancel such surrendered certificate. Each such new
certificate shall be registered in such name and shall represent such number of
shares of such class as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate. The issuance of new certificates shall be made without charge to
the holders of the surrendered certificates for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
issuance.

          Section 5. Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (provided, that an affidavit of the registered
holder will be satisfactory) of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing one or more shares of any class of
Common Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Corporation (provided that
if the holder is a financial institution or other institutional investor its own
agreement will be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.

          Section 6. Notices. All notices referred to herein shall be in
writing, and shall be delivered by registered or certified mail, return receipt
requested, postage prepaid, and shall be deemed to have been given when so
mailed (i) to the Corporation at its principal executive offices and (ii) to any
stockholder at such holder's address as it appears in the stock records of the
Corporation (unless otherwise specified in a written notice to the Corporation
by such holder).

          Section 7. Amendment and Waiver. No amendment or waiver of any
provision of this Part C shall be effective without the prior consent of the
holders of a majority of the then outstanding shares of Common Stock voting as a
single class.

          Part D. Definitions. For purposes of this Article Four, the following
terms shall have the following meanings:

                                      -10-



          "Conversion Shares" means the Corporation's Common Stock; provided
that if there is a change such that the securities issuable upon conversion of
the Shares are issued by an entity other than the Corporation or there is a
change in the class of securities so issuable, then the term "Conversion Share"
shall mean one share of the security issuable upon conversion of the Shares if
such security is issuable in shares, or shall mean the smallest unit in which
such security is issuable if such security is not issuable in shares.

          "IPO Price" means the price at which the Common Stock is offered to
the public pursuant to the initial Public Offering.

          "Junior Securities" means any capital stock or other equity securities
of the Corporation, except for the Shares.

          "Liquidation Value" of any Share as of any particular date shall be
equal to $1,000.

          "Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

          "Preferred Value" of any Share as of any particular date shall be
equal to the Liquidation Value of such Share plus all accrued and unpaid
dividends thereon.

          "Public Offering" means any sale of the common equity securities of
the Corporation pursuant to an effective registration statement under the
Securities Act filed with the Securities and Exchange Commission; provided that
the following shall not be considered a Public Offering: (i) any issuance of
common equity securities as consideration for a merger or acquisition and (ii)
any issuance of common equity securities or rights to acquire common equity
securities to employees of the Corporation or its Subsidiaries as part of an
incentive or compensation plan.

          "Redemption Date" as to any Share means the date specified in the
notice of any redemption at the Corporation's option or at the holder's option
or the applicable date specified herein in the case of any other redemption;
provided that no such date shall be a Redemption Date unless the Liquidation
Value of such Share (plus all accrued and unpaid dividends thereon and any
required premium with respect thereto) is actually paid in full on such date,
and if not so paid in full, the Redemption Date shall be the date on which such
amount is fully paid.

          "Repurchase Agreements" mean, collectively, all agreements which
provide for a repurchase of the capital stock of the Corporation upon
termination of employment or similar events or circumstances as approved by the
Corporation's Board of Directors.

          "Securities Act" means the Securities Act of 1933, as amended, and
applicable rules and regulations thereunder, and any successor to such statute,
rules, or regulations. Any reference herein to a specific section, rule, or
regulation of the Securities Act shall be deemed to include any corresponding
provisions of future law.

                                      -11-



          "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, and applicable rules and regulations thereunder, and any successor
to such statute, rules, or regulations. Any reference herein to a specific
section, rule, or regulation of the Securities Exchange Act shall be deemed to
include any corresponding provisions of future law.

          "Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.

                                      -12-

EX-3.2

                                                                     EXHIBIT 3.2

                              CERTIFICATE OF MERGER

                                       OF

                              THL FOOD PRODUCTS CO.

                                  WITH AND INTO

                             M-FOODS HOLDINGS, INC.

     The undersigned corporations do hereby certify that:

                                       I.

     The undersigned corporation, M-Foods Holdings, Inc., is the surviving
corporation (the "Surviving Corporation") in a merger (the "Merger") between the
following constituent corporations, and the name and state of incorporation of
each of the constituent corporations in the Merger are as follows:

                 Name                           State of Incorporation
                 ----                           ----------------------
          THL Food Products Co.                        Delaware
          M-Foods Holdings, Inc.                       Delaware

     The name of the Surviving Corporation in the Merger is M-Foods Holdings,
Inc.

                                       II.

     The Certificate of Incorporation of M-Foods Holdings, Inc., which is the
surviving corporation, in effect on the date hereof, shall continue in full
force and effect as the Certificate of Incorporation of the corporation
surviving the Merger.

                                      III.

     An Agreement and Plan of Merger among the parties to the Merger has been
approved, adopted and executed by each of the constituent corporations in
accordance with the requirements of section 251 of the General Corporation Law
of the State of Delaware and is on file at the principal place of business of
M-Foods Holdings, Inc., 301 Carlson Parkway, Suite 400, Minnetonka, MN 55305.

                                       IV.

     A copy of the Agreement and Plan of Merger will be furnished by M-Foods
Holdings, Inc., on request and without cost, to any shareholder of any
constituent corporation.




                                       V.

     The Merger was duly approved by the shareholders of the constituent
corporations.

                                       VI.

     This Certificate of Merger shall be effective upon the filing hereof with
the Secretary of State of the State of Delaware.

     DULY EXECUTED on this date November 20, 2003.

                                        M-Foods Holdings, Inc.


                                        By: /s/ John Reedy
                                            ------------------------------------
                                        Name: John Reedy
                                        Title: Chief Financial Officer


                                        THL FOOD PRODUCTS CO.


                                        By: /s/ John Reedy
                                            ------------------------------------
                                        Name: John Reedy
                                        Title: Chief Financial Officer


                                      -2-

EX-3.3

                                                                     EXHIBIT 3.3

                                                                  Execution Copy

                          AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER dated November 20, 2003, by and between
M-Foods Holdings, Inc., a Delaware corporation and successor to THL Food
Products Co. ("Holdings"), and Michael Foods, Inc., a Minnesota corporation
("MFI"). Each of Holdings and MFI are referred to herein as a "Constituent
Corporation."

     WHEREAS, the respective Boards of Directors of Holdings and MFI deem it
desirable and for the benefit of the respective Constituent Corporations and
their respective stockholders that the Constituent Corporations be merged into a
single corporation with Holdings being the surviving corporation (the "Surviving
Corporation").

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein, the parties hereto agree that, pursuant to Section 302A.651 of the
Minnesota Business Corporation Act and Section 252 of the Delaware General
Corporation Law, the Constituent Corporations shall be merged into a single
corporation (the "Merger"), and that the terms and conditions of the Merger are
as follows:

                                    Article I

     On the Effective Date of the Merger (as hereinafter defined), MFI shall be
merged with and into Holdings, with Holdings being the surviving corporation
(the "Surviving Corporation"), and the separate existence of MFI shall cease.

                                   Article II

     The name of the Surviving Corporation shall be "Michael Foods, Inc."

                                   Article III

     The Surviving Corporation is authorized to issue 3,000 shares of capital
stock, all which shares are common stock, $0.01 par value per share (the "Common
Stock").

                                   Article IV

     The shares of common stock, no stated par value per share, of Holdings
issued and outstanding as of the Effective Date of the Merger shall be converted
on a one-to-one share basis into shares of Common Stock of the Surviving
Corporation such that ownership of one share of common stock of Holdings that is
issued and outstanding shall entitle the owner thereof to a total of one share
of Common Stock of the Surviving Corporation.




                                    Article V

     On the Effective Date of the Merger, the Certificate of Incorporation and
By-Laws of Holdings immediately prior to the Effective Date attached hereto as
Exhibit A and Exhibit B, respectively, shall be the Certificate of Incorporation
and By-Laws of the Surviving Corporation.

                                   Article VI

     The Directors and Officers of Holdings shall continue to serve as the
Directors and Officers of the Surviving Corporation, until their resignation or
removal or until their successors have been duly elected and qualified.

                                   Article VII

     This Agreement shall be submitted to the Stockholders of Holdings and MFI
at a meeting thereof called for the purpose of considering and acting upon this
Agreement or by consent of Stockholders in lieu of a meeting.

                                  Article VIII

     As used herein, the term "Effective Date of the Merger" shall mean the date
that a Certificate of Merger is filed with the Secretary of the State of
Minnesota and the Secretary of the State of Delaware, in accordance with the
laws of the respective jurisdictions.

                                   Article IX

     The Merger contemplated by this Agreement may be abandoned by mutual
consent and agreement of Holdings and MFI at any time prior to the filing of the
Certificates of Merger with the Secretary of the State of Minnesota and the
Secretary of the State of Delaware.



     WITNESS the execution hereof under seal on the day and year first above
written.

                                          M-FOODS HOLDINGS, INC.


                                          By: /s/ Gregg A. Ostrander
                                              ----------------------------------
                                              Name: Gregg A. Ostrander
                                              Title: Chief Executive Officer and
                                                     President


                                          MICHAEL FOODS, INC.


                                          By: /s/ Gregg A. Ostrander
                                              ----------------------------------
                                              Name: Gregg A. Ostrander
                                              Title: Chief Executive Officer and
                                                     President

             Signature Page to Agreement and Plan of Merger between
                 M-Foods Holdings, Inc. and Michael Foods, Inc.

EX-3.4

                                                                     EXHIBIT 3.4

                              CERTIFICATE OF MERGER

                                       OF

                               MICHAEL FOODS, INC.

                                  WITH AND INTO

                             M-FOODS HOLDINGS, INC.

                                   ----------

                         Pursuant to Section 252 of the

                             General Corporation Law

                                   ----------

          M-Foods Holdings, Inc. ("Holdings"), a Delaware corporation, does
hereby certify to the following facts relating to the merger of Michael Foods,
Inc., a Minnesota corporation ("MFI"), with and into Holdings (the "Merger"):

          FIRST: The names and jurisdictions of formation or organization of the
constituent entities to the Merger are as follows:

                                                           Jurisdiction of
         Name                                          Formation or Organization
         ----                                          -------------------------
Michael Foods, Inc.                                            Minnesota
M-Foods Holdings, Inc.                                         Delaware

          SECOND: An Agreement and Plan of Merger, dated as of November 20, 2003
(the "Agreement and Plan of Merger"), by and between Holdings and MFI has been
approved, adopted, certified, executed and acknowledged by each of the
constituent entities in accordance with Section 252 of the General Corporation
Law of the State of Delaware.

          THIRD: The name of the corporation surviving the Merger shall be
M-Foods Holdings, Inc. (the "Surviving Corporation"), which name shall be
changed to Michael Foods, Inc.

          FOURTH: The Certificate of Incorporation of Holdings as in effect
immediately prior to the merger shall be the Certificate of Incorporation of the
Surviving Corporation except that Article One and Four shall be amended to read
as follows:



               FIRST: The name of the corporation shall be:

                               MICHAEL FOODS, INC.

          FOURTH: The total number of stock which this corporation is authorized
to issue is: 3,000 shares of capital stock, all which shares are common stock,
$0.01 par value per share.

          FIFTH: An executed copy of the Agreement and Plan of Merger is on file
at the principal place of business of the Surviving Corporation, which is
located at 301 Carlson Parkway, Suite 400, Minnetonka, MN 55305.

          SIXTH: A copy of the Agreement and Plan of Merger will be furnished by
the Surviving Corporation, on request and without cost, to any stockholder or
member of either constituent entity.

          SEVENTH: That this Certificate shall be effective upon filing with the
Secretary of State of the State of Delaware.

                                   * * * * * *

     IN WITNESS WHEREOF, M-Foods Holdings, Inc. has caused this Certificate of
Merger to be executed in its corporate name this      day of November, 2003.
                                                 ----

                                        M-FOODS HOLDINGS, INC.
                                        a Delaware corporation


                                        By: /s/ John D. Reedy
                                            ------------------------------------
                                        Name: John D. Reedy
                                        Title: Chief Financial Officer

                                       -2-

EX-3.5

                                                                     Exhibit 3.5
                                     BY-LAWS

                                       OF

                             M-FOODS HOLDINGS, INC.

                             A Delaware Corporation

                                    ARTICLE I

                                     OFFICES

     Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1209 Orange Street, Wilmington,
Delaware, County of New Castle. The name of the corporation's registered agent
at such address shall be The Corporation Trust Company. The registered office
and/or registered agent of the corporation may be changed from time to time by
action of the board of directors.

     Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

     Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall be
determined by the president of the corporation; provided, that if the president
does not act, the board of directors shall determine the date, time and place of
such meeting.

     Section 2. Special Meetings. Special meetings of stockholders may be called
for any purpose and may be held at such time and place, within or without the
State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors, the president or the holders of shares entitled to cast
not less than a majority of the votes at the meeting.

     Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special



meeting be otherwise called, the place of meeting shall be the principal
executive office of the corporation.

     Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than 10 nor more than 60 days before the date of the meeting. All such notices
shall be delivered, either personally or by mail, by or at the direction of the
board of directors, the president or the secretary, and if mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation.

     Section 5. Stockholders List. The officer having charge of the stock ledger
of the corporation shall make, at least 10 days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

     Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.

     Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

     Section 8. Vote Required. When a quorum is present, the affirmative vote of
the majority of shares present in person or represented by proxy at the meeting
and entitled to vote on the subject matter shall be the act of the stockholders,
unless the question is one upon which

                                      -2-



by express provisions of an applicable law or of the certificate of
incorporation a different vote is required, in which case such express provision
shall govern and control the decision of such question.

     Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.

     Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.

     Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.

                                   ARTICLE III

                                    DIRECTORS

                                      -3-



     Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.

     Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be three (3). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.

     Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.

     Section 4. Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.

     Section 5. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held, without other notice than this by-law, immediately
after and at the same place as, the annual meeting of stockholders.

     Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president on at least 24 hours notice to each director, either
personally, by telephone, by mail, or by telegraph.

     Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors

                                       -4-



present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.

     Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.

     Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.

     Section 10. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.

     Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.

     Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of

                                       -5-



incorporation any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the board or committee.

                                   ARTICLE IV

                                    OFFICERS

     Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman, if any is elected, a
president/chief executive officer, a vice-president, if any is elected, a
secretary, a treasurer, if any is elected, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors. Any
number of offices may be held by the same person. In its discretion, the board
of directors may choose not to fill any office for any period as it may deem
advisable.

     Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any meeting
of the board of directors. Each officer shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.

     Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgement the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.

     Section 4. Vacancies. Any vacancy occurring in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term by the board of directors
then in office.

     Section 5. Compensation. Compensation of all officers shall be fixed by the
board of  director,  and no  officer  shall be  prevented  from  receiving  such
compensation by virtue of his or her also being a director of the corporation.

     Section 6. Chairman of the Board. The chairman, if one shall be elected,
shall be the chief executive officer of the corporation, and shall have the
powers and perform the duties incident to that position. Subject to the powers
of the board of directors, he or she shall be in the general and active charge
of the entire business and affairs of the corporation, and shall be its chief
policy making officer. He or she shall preside at all meetings of the board of
directors and

                                       -6-



stockholders and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or provided in these by-laws.
Whenever the president is unable to serve, by reason of sickness, absence or
otherwise, the chairman of the board shall perform all the duties and
responsibilities and exercise all the powers of the president.

     Section 7. The President. The president shall, if no chairman is provided
for, be the chief executive officer of the corporation; shall preside at all
meetings of the stockholders and board of directors at which he or she is
present; subject to the powers of the board of directors and the chairman, shall
have general charge of the business, affairs and property of the corporation,
and control over its officers, agents and employees; and shall see that all
orders and resolutions of the board of directors are carried into effect. The
president shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation. The president shall have such other powers
and perform such other duties as may be prescribed by the chairman or the board
of directors or as may be provided in these by-laws.

     Section 8. Vice-presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, act with all of the powers
and be subject to all the restrictions of the president. The vice-presidents
shall also perform such other duties and have such other powers as the board of
directors the chairman, the president or these by-laws may, from time to time,
prescribe.

     Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the chairman, the president
or these by-laws may, from time to time, prescribe; and shall have custody of
the corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
chairman, the president, or secretary may, from time to time, prescribe.

                                       -7-



     Section 10. The Treasurer and Assistant Treasurer. The treasurer shall have
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors; shall
cause the funds of the corporation to be disbursed when such disbursements have
been duly authorized, taking proper vouchers for such disbursements; and shall
render to the president and the board of directors, at its regular meeting or
when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
chairman, the president or these by-laws may, from time to time, prescribe. If
required by the board of directors, the treasurer shall give the corporation a
bond (which shall be rendered every six years) in such sums and with such surety
or sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of the office of treasurer and for the restoration to
the corporation, in case of death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the chairman, the
president or treasurer may, from time to time, prescribe.

     Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.

     Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.

                                    ARTICLE V

               INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

     Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the

                                      -8-



corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended against all expense, liability and loss
(including attorneys' fees actually and reasonably incurred by such person in
connection with such proceeding) and such indemnification shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in Section 2 hereof, the corporation shall indemnify
any such person seeking indemnification in connection with a proceeding
initiated by such person only if such proceeding was authorized by the board of
directors of the corporation. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.

     Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the corporation fails to respond within sixty days to a written request for
indemnity, the corporation shall be deemed to have approved the request. If the
corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

                                       -9-



     Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.

     Section 4. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.

     Section 5. Expenses. Expenses incurred by any person described in Section 1
of this Article V in defending a proceeding shall be paid by the corporation in
advance of such proceeding's final disposition unless otherwise determined by
the board of directors in the specific case upon receipt of an undertaking by or
on behalf of the director or officer to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.

     Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.

     Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.

     Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint

                                      -10-



venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.

                                   ARTICLE VI

                              CERTIFICATES OF STOCK

     Section 1. Form. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by the
chairman, president or a vice-president and the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of any such chairman, president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of stock
of the corporation shall only be transferred on the books of the corporation by
the holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.

     Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When

                                      -11-



authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.

     Section 3. Fixing a Record Date for Stockholder Meetings. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be the close of business on the next day preceding
the day on which notice is given, or if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.

     Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.

     Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or

                                      -12-



allotment or any rights or the stockholders entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purposes of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the board of directors adopts the resolution relating
thereto.

     Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.

     Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.

                                   ARTICLE VII

                               GENERAL PROVISIONS

     Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or any other purpose and the directors may
modify or abolish any such reserve in the manner in which it was created.

     Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or

                                      -13-



a duly authorized committee thereof.

     Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.

     Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.

     Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.

     Section 6. Corporate Seal. The board of directors shall provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.

     Section 7. Voting Securities Owned By Corporation. Voting securities in any
other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.

     Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.

                                      -14-



     Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.

     Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.

                                  ARTICLE VIII

                                   AMENDMENTS

     These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.

                                   ARTICLE IX

                          CERTAIN BUSINESS COMBINATIONS

     The corporation, by the affirmative vote (in addition to any other vote
required by law or the certificate of incorporation) of its stockholders holding
a majority of the shares entitled to vote, expressly elects not to be governed
by (S)203 of the General Corporation Law of the State of Delaware.

                                      -15-

EX-4.3

                                                                     EXHIBIT 4.3

                                                                  EXECUTION COPY

                          FOURTH SUPPLEMENTAL INDENTURE

          This Fourth Supplemental Indenture, dated as of October 31, 2003, by
and among Michael Foods, Inc., a Minnesota corporation (the "Company") and BNY
Midwest Trust Company, as trustee under the Indenture referred to below (the
"Trustee").

                               W I T N E S S E T H

          WHEREAS, Michael Foods Acquisition Corp. ("Acquisition") has
heretofore executed and delivered to the Trustee an indenture (the "Indenture"),
dated as of March 27, 2001 providing for the issuance of an aggregate principal
amount of up to $300 million of 11 3/4% Senior Subordinated Notes due 2011 (the
"Notes");

          WHEREAS, pursuant to the Supplemental Indenture, dated as of April 10,
2001, the Company, as successor by merger to Acquisition, has expressly assumed
all of the respective obligations of Acquisition as issuer of the Notes under
the Indenture;

          WHEREAS, the Company desires to execute and deliver an amendment to
the Indenture for the purposes of eliminating and amending certain of the
principal restrictive covenants and certain other provisions contained in the
Indenture and the Notes;

          WHEREAS, THL Food Products Co., a Delaware corporation (the
"Purchaser") has caused to be delivered to the Holders of the Notes an Offer to
Purchase and Consent Solicitation Statement, dated October 20, 2003 (as the same
may be amended from time to time, the "Statement") and the related Consent and
Letter of Transmittal, pursuant to which the Purchaser has (i) offered to
purchase for cash any and all of the outstanding Notes (such offer on the terms
set forth in the Statement and such Consent and Letter of Transmittal, the
"Offer") and (ii) solicited consents to the adoption of amendments to the
Indenture, as further described herein;

          WHEREAS, pursuant to Section 9.02 of the Indenture, the Company and
the Trustee may amend or supplement the Indenture or the Notes in respect of the
matters described in the Statement with the written consent of the Holders of at
least a majority in principal amount of the Notes (the "Requisite Holders");

          WHEREAS, the Purchaser has received the written consents of the
Requisite Holders to the amendments to the Indenture set forth in this Fourth
Supplemental Indenture;

          WHEREAS, the Company and the Trustee desire to enter into, execute and
deliver this Fourth Supplemental Indenture in compliance with the provisions of
the Indenture; and



          WHEREAS, all other conditions and requirements necessary to make this
Fourth Supplemental Indenture a valid and binding instrument in accordance with
its terms and the terms of the Indenture have been satisfied;

          NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto mutually covenant and agree for the equal and ratable benefit of
the Holders of the Notes as follows:

          1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

          2. Amendment of Certain Provisions of the Indenture. The Indenture is
hereby amended to provide that, effective upon the Operative Time (as defined in
Section 4 of this Fourth Supplemental Indenture):

          2.1 Elimination of Definitions. Each definition set forth in Section
     1.01 of the Indenture of any capitalized term that (i) is not used in any
     provision of the Indenture other than the provisions listed in Section 2.2
     below (such definitions, collectively, the "Exclusive Definitions"), and/or
     (ii) is not used in any provision of the Indenture other than in the
     Exclusive Definitions, is deleted in its entirety.

          2.2 Elimination of Provisions. The text of and introductory heading to
     each Section of the Indenture listed below (excluding the Section number at
     the beginning of each such Section) are deleted in their entirety and the
     phrase "[Intentionally Omitted]" is inserted in substitution therefor, and
     all references to such Sections are deleted in their entirety:

          (i) Section 4.03 (entitled "Reports");

          (ii) Section 4.07 (entitled "Restricted Payments");

          (iii) Section 4.08 (entitled "Dividend and Other Payment Restrictions
Affecting Restricted Securities")

          (iv) Section 4.09 (entitled "Incurrence of Indebtedness and Issuance
of Preferred Stock");

          (v) Section 4.10 (entitled "Asset Sales");

          (vi) Section 4.11 (entitled "Transactions with Affiliates");

          (vii) Section 4.12 (entitled "Liens");

          (viii) Section 4.14 (entitled "Offer to Repurchase upon Change of
Control");

                                       2



          (ix) Section 4.15 (entitled "Limitation on Other Senior Subordinated
Debt");

          (x) Section 4.16 (entitled "Sale and Leaseback Transactions");

          (xi) Section 4.17 (entitled "Limitation on Issuances of Guarantees of
Indebtedness");

          (xii) Section 4.18 (entitled "Additional Guarantees");

          (xiii) Section 4.19 (entitled "Business Activities"); and

          (xiv) Section 4.20 (entitled "Designation of Restricted and
Unrestricted Subsidiaries").

          2.3 Amendment to Article Five. The text of Section 5.01 (entitled
     "Merger, Consolidation, or Sale of Assets"), excluding the Section number
     and introductory heading at the beginning of such Section, is amended in
     its entirety to read as follows:

          "The Company will not, directly or indirectly, consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation), and the Company will not, and will not cause or permit any
Restricted Subsidiary to, sell, assign, transfer, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person (including by way of consolidation or merger), unless either:
(a) the Company or such Restricted Subsidiary, as the case may be, is the
surviving corporation; or (b) the Person formed by or surviving any such
consolidation or merger (if other than the Company or such Restricted
Subsidiary) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation, partnership or limited
liability company organized or existing under the laws of the United States, any
state thereof or the District of Columbia; provided, that in the case such
Person is a limited liability company or a partnership, a co-obligor of the
Notes is a corporation."

          2.4 Amendment to Article Six. The text of Section 6.01 (entitled
     "Events of Default"), excluding the Section number and introductory heading
     at the beginning of such Section, is amended in its entirety to read as
     follows:

          "Each of the following is an "Event of Default":

          (a) default in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not permitted by Article 10
hereof) and such default continues for a period of 30 days;

          (b) default in payment when due of the principal of or premium, if
any, on the Notes (whether or not permitted by Article 10 hereof);

                                       3



          (c) [Intentionally Omitted];

          (d) failure by the Company or any of its Restricted Subsidiaries for
45 days after notice from the Trustee or holders of at least 25% in principal
amount of the Notes including Additional Notes, if any then outstanding to
comply with any of its other covenants or agreements in this Indenture or the
Notes;

          (e) [Intentionally Omitted];

          (f) [Intentionally Omitted];

          (g) except as permitted by this Indenture, any Note Guarantee of a
Guarantor (other than an Immaterial Guarantor) shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor (other than an Immaterial Guarantor), or
any Person acting on behalf of any Guarantor (other than an Immaterial
Guarantor), shall deny or disaffirm its obligations under its Note Guarantee;

          (h) the Pledge Agreement shall cease to be in full force and effect or
enforceable in accordance with its terms (other than in accordance with its
terms) or the Company denies or disaffirms its obligations under the Pledge
Agreement or the obligations under the Pledge Agreement cease to be secured by a
perfected first priority security interest in any portion of the collateral
purported to be pledged under the Pledge Agreement (other than in accordance
with its terms); and

          (i) any Guarantor, the Company or any of its Subsidiaries that is a
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:

               (i) commences a voluntary case; or

               (ii) consents to entry of an order for relief against it in an
          involuntary case; or

               (iii) consents to the appointment of a custodian of it or for all
          or substantially all of its property; or

               (iv) makes a general assignment for the benefit of its creditors;
          or

               (v) generally is not paying its debts as they become due; or

          (j) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

               (i) is for relief against any Guarantor, the Company or any of
          its Subsidiaries that is a Significant Subsidiary or any group of
          Subsidiaries

                                       4



          that, taken as a whole, would constitute a Significant Subsidiary in
          an involuntary case;

               (ii) appoints a custodian of any Guarantor, the Company or any of
          its Subsidiaries that is a Significant Subsidiary or any group of
          Subsidiaries that, taken as a whole, would constitute a Significant
          Subsidiary or for all or substantially all of the property of any
          Guarantor, the Company or any of its Subsidiaries that is a
          Significant Subsidiary or any group of Subsidiaries that, taken as a
          whole, would constitute a Significant Subsidiary; or

               (iii) orders the liquidation of any Guarantor, the Company or any
          of its Subsidiaries that is a Significant Subsidiary or any group of
          Subsidiaries that, taken as a whole, would constitute a Significant
          Subsidiary;

     and the order or decree remains unstayed and in effect for 60 consecutive
     days."

          3. Ratification of Indenture; Fourth Supplemental Indenture Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed by the parties hereto and all the terms, conditions and
provisions thereof shall remain in full force and effect. This Fourth
Supplemental Indenture shall form a part of the Indenture for all purposes, and
every holder of Notes heretofore or hereafter authenticated and delivered shall
be bound hereby and thereby.

          4. Operative Time. Notwithstanding the execution of this Fourth
Supplemental Indenture on the date hereof, the amendments set forth in Section 2
of this Fourth Supplemental Indenture shall not become operative unless and
until the Purchaser accepts Notes for purchase pursuant to the Offer (the date
and time of such acceptance being referred to herein as the "Operative Time").
At the Operative Time, the amendments to the Indenture effected hereby shall be
deemed fully operative without any further notice or action on the part of the
Company, the Guarantors, the Trustee, the Purchaser, any Holder or any other
Person.

          5. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS FOURTH SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

          6. Counterparts. The parties may sign any number of copies of this
Fourth Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.

          7. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.

                                       5



          8. Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Fourth
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company.

          9. Trust Indenture Act Controls. If any provision of this Fourth
Supplemental Indenture limits, qualifies or conflicts with another provision
which is required to be included in this Fourth Supplemental Indenture by the
Trust Indenture Act of 1939, as amended, the required provision shall control.

          10. Separability. In case any provision in this Fourth Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                            [signature page follows]

                                       6



          IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.

                                           COMPANY:

                                           MICHAEL FOODS, INC.

                                           By: /s/ Gregg A. Ostrander
                                               ---------------------------------
                                               Name:   Gregg A. Ostrander
                                               Title:  Chief Executive Officer &
                                                       President

                                           TRUSTEE:

                                           BNY MIDWEST TRUST COMPANY

                                           By: /s/ D.G. Donovan
                                               ---------------------------------
                                               Name:   D.G. Donovan
                                               Title:  Assistant Vice President

                                       7

EX-4.5

                                                                     EXHIBIT 4.5

                                                                  EXECUTION COPY

                               MICHAEL FOODS, INC.

                      8% SENIOR SUBORDINATED NOTES DUE 2013

                                    INDENTURE

                          Dated as of November 20, 2003

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

                                     Trustee



                             CROSS-REFERENCE TABLE*

Trust Indenture Act                                                    Indenture
Section                                                                 Section
- -------------------                                                    ---------
310(a)(1)...........................................................      7.10
   (a)(2)...........................................................      7.10
   (a)(5)...........................................................      7.10
   (b)..............................................................      7.10
   (c)..............................................................      N.A.
311(a)..............................................................      7.11
   (b)..............................................................      7.11
312(a)..............................................................      2.05
   (b)..............................................................     13.03
   (c)..............................................................     13.03
313(a)..............................................................      7.06
   (b)(2)...........................................................      7.06
   (c)..............................................................      7.06
                                                                         13.02
   (d)..............................................................      7.06
314(a)..............................................................      4.03
                                                                         13.05
   (c)(1)...........................................................     13.04
   (c)(2)...........................................................     13.04
   (e)..............................................................     13.05
316(a)(last sentence)...............................................      2.09
   (a)(1)(A)........................................................      6.05
   (a)(1)(B)........................................................      6.04
317(a)(1)...........................................................      6.08
* This Cross-Reference Table is not part of this Indenture.



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.....................................................1

SECTION 1.02. Other Definitions..............................................25

SECTION 1.03. Incorporation by Reference of Trust Indenture Act..............26

SECTION 1.04. Rules of Construction..........................................26

                                    ARTICLE 2
                                    THE NOTES

SECTION 2.01. Form and Dating................................................27

SECTION 2.02. Execution and Authentication...................................27

SECTION 2.03. Registrar and Paying Agent.....................................28

SECTION 2.04. Paying Agent to Hold Money in Trust............................28

SECTION 2.05. Holder Lists...................................................29

SECTION 2.06. Transfer and Exchange..........................................29

SECTION 2.07. Replacement Notes..............................................40

SECTION 2.08. Outstanding Notes..............................................41

SECTION 2.09. Treasury Notes.................................................41

SECTION 2.10. Temporary Notes................................................41

SECTION 2.11. Cancellation...................................................42

SECTION 2.12. Defaulted Interest.............................................42

SECTION 2.13. CUSIP Numbers..................................................42

SECTION 2.14. Issuance of Additional Notes...................................42

                                       ii



                                    ARTICLE 3
                            REDEMPTION AND PREPAYMENT

SECTION 3.01. Notices to Trustee..............................................42

SECTION 3.02. Selection of Notes to be Redeemed...............................43

SECTION 3.03. Notice of Redemption............................................43

SECTION 3.04. Effect of Notice of Redemption..................................44

SECTION 3.05. Deposit of Redemption Price.....................................44

SECTION 3.06. Notes Redeemed in Part..........................................44

SECTION 3.07. Optional Redemption.............................................44

SECTION 3.08. Mandatory Redemption............................................45

SECTION 3.09. Offer to Purchase...............................................45

                                    ARTICLE 4
                                    COVENANTS

SECTION 4.01. Payment of Notes................................................47

SECTION 4.02. Maintenance of Office or Agency.................................47

SECTION 4.03. Reports.........................................................48

SECTION 4.04. Compliance Certificate..........................................48

SECTION 4.05. Taxes...........................................................49

SECTION 4.06. Stay, Extension and Usury Laws..................................49

SECTION 4.07. Restricted Payments.............................................49

SECTION 4.08. Dividend and Other Payment Restrictions Affecting
              Restricted Subsidiaries.........................................54

SECTION 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock......55

SECTION 4.10. Asset Sales.....................................................59

SECTION 4.11. Transactions with Affiliates....................................61

SECTION 4.12. Liens...........................................................63

                                       iii



SECTION 4.13. Corporate Existence.............................................63

SECTION 4.14. Offer to Repurchase upon Change of Control......................63

SECTION 4.15. Limitation on Other Senior Subordinated Debt....................64

SECTION 4.16. [Reserved]......................................................65

SECTION 4.17. Limitation on Issuances of Guarantees of Indebtedness...........65

SECTION 4.18. Additional Guarantees...........................................65

SECTION 4.19. Business Activities.............................................65

SECTION 4.20. Designation of Restricted and Unrestricted Subsidiaries.........65

                                    ARTICLE 5
                                   SUCCESSORS

SECTION 5.01. Merger Consolidation, or Sale of Assets.........................66

SECTION 5.02. Successor Corporation Substituted...............................67

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

SECTION 6.01. Events of Default...............................................67

SECTION 6.02. Acceleration....................................................69

SECTION 6.03. Other Remedies..................................................69

SECTION 6.04. Waiver of Past Defaults.........................................70

SECTION 6.05. Control by Majority.............................................70

SECTION 6.06. Limitation on Suits.............................................70

SECTION 6.07. Rights of Holders of Notes to Receive Payment...................71

SECTION 6.08. Collection Suit by Trustee......................................71

SECTION 6.09. Trustee May File Proofs of Claim................................71

SECTION 6.10. Priorities......................................................72

SECTION 6.11. Undertaking for Costs...........................................72

                                       iv



                                    ARTICLE 7
                                     TRUSTEE

SECTION 7.01. Duties of Trustee...............................................72

SECTION 7.02. Rights of Trustee...............................................73

SECTION 7.03. Individual Rights of Trustee....................................74

SECTION 7.04. Trustee's Disclaimer............................................74

SECTION 7.05. Notice of Defaults..............................................74

SECTION 7.06. Reports by Trustee to the Holders of the Notes..................75

SECTION 7.07. Compensation and Indemnity......................................75

SECTION 7.08. Replacement of Trustee..........................................76

SECTION 7.09. Successor Trustee by Merger, etc................................77

SECTION 7.10. Eligibility; Disqualification...................................77

SECTION 7.11. Preferential Collection of Claims Against Company...............77

                                    ARTICLE 8
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........77

SECTION 8.02. Legal Defeasance and Discharge..................................77

SECTION 8.03. Covenant Defeasance.............................................78

SECTION 8.04. Conditions to Legal Defeasance or Covenant Defeasance...........78

SECTION 8.05. Deposited Money and Cash Equivalents to be Held in Trust;
              Other Miscellaneous Provisions..................................80

SECTION 8.06. Repayment to Company............................................80

SECTION 8.07. Reinstatement...................................................80

                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01. Without Consent of Holders of Notes.............................81

SECTION 9.02. With Consent of Holders of Notes................................82

                                       v



SECTION 9.03. Compliance with Trust Indenture Act.............................83

SECTION 9.04. Revocation and Effect of Consents...............................83

SECTION 9.05. Notation on or Exchange of Notes................................84

SECTION 9.06. Trustee to Sign Amendments, etc.................................84

SECTION 9.07. Payments for Consent............................................84

                                   ARTICLE 10
                                  SUBORDINATION

SECTION 10.01. Agreement to Subordinate.......................................84

SECTION 10.02. Liquidation; Dissolution; Bankruptcy...........................84

SECTION 10.03. Default on Designated Senior Debt..............................85

SECTION 10.04. Acceleration of Securities.....................................86

SECTION 10.05. When Distribution Must Be Paid Over............................86

SECTION 10.06. Notice by the Company..........................................86

SECTION 10.07. Subrogation....................................................87

SECTION 10.08. Relative Rights................................................87

SECTION 10.09. Subordination May Not Be Impaired by the Company...............87

SECTION 10.10. Distribution or Notice to Representative.......................87

SECTION 10.11. Rights of Trustee and Paying Agent.............................88

SECTION 10.12. Authorization to Effect Subordination..........................88

                                   ARTICLE 11
                                 NOTE GUARANTEES

SECTION 11.01. Guarantee......................................................88

SECTION 11.02. Subordination of Note Guarantee................................89

SECTION 11.03. Limitation on Guarantor Liability..............................89

SECTION 11.04. Execution and Delivery of Note Guarantee.......................90

SECTION 11.05. Guarantors May Consolidate, etc., on Certain Terms.............90

                                       vi



SECTION 11.06. Releases Following Sale of Assets..............................91

SECTION 11.07. Severability...................................................91

                                   ARTICLE 12
                           SATISFACTION AND DISCHARGE

SECTION 12.01. Satisfaction and Discharge....................................92

SECTION 12.02. Deposited Money and Government Securities to Be Held
               in Trust......................................................93

SECTION 12.03. Repayment to the Company......................................93

SECTION 12.04. Survival......................................................93

SECTION 12.05. Reinstatement.................................................93

                                   ARTICLE 13
                                  MISCELLANEOUS

SECTION 13.01. Trust Indenture Act Controls...................................94

SECTION 13.02. Notices........................................................94

SECTION 13.03. Communication by Holders of Notes with Other Holders
               of Notes.......................................................95

SECTION 13.04. Certificate and Opinion as to Conditions Precedent.............96

SECTION 13.05. Statements Required in Certificate or Opinion..................96

SECTION 13.06. Rules by Trustee and Agents....................................96

SECTION 13.07. No Personal Liability of Directors, Officers, Employees
               and Stockholders...............................................96

SECTION 13.08. Governing Law..................................................97

SECTION 13.09. No Adverse Interpretation of Other Agreements..................97

SECTION 13.10. Successors.....................................................97

SECTION 13.11. Severability...................................................97

SECTION 13.12. Counterpart Originals..........................................97

SECTION 13.13. Table of Contents, Headings, etc...............................97

                                      vii



                                    EXHIBITS

Exhibit A   FORM OF NOTE
Exhibit B   FORM OF CERTIFICATE OF TRANSFER
Exhibit C   FORM OF CERTIFICATE OF EXCHANGE
Exhibit D   FORM OF IAI CERTIFICATE
Exhibit E   FORM OF SUPPLEMENTAL INDENTURE

                                      viii



          INDENTURE dated as of November 20, 2003 among Michael Foods, Inc., a
Delaware corporation (the "Company"), the Guarantors (as defined below) and
Wells Fargo Bank Minnesota, National Association, a national banking
association, trustee (the "Trustee").

          The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the 8% Senior
Subordinated Notes due 2013 (the "Notes"):

                                   ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

          SECTION 1.01. Definitions.

          "144A Global Note" means a global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 144A.

          "Acquired Debt" means, with respect to any specified Person (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.

          "Additional Notes" means Notes (other than the Initial Notes) issued
under this Indenture in accordance with Sections 2.02 and 4.09 hereof.

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.

          "Agent" means any Registrar, Paying Agent or co-registrar.

          "Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.

          "Asset Acquisition" means (a) an Investment by the Company or any of
its Restricted Subsidiaries in any other Person if, as a result of such
Investment, such Person shall become a Restricted Subsidiary of the Company, or
shall be merged with or into the Company or any Restricted Subsidiary of the
Company, or (b) the acquisition by the Company or any



Restricted Subsidiary of the Company of all or substantially all of the assets
of any other Person or any division or line of business of any other Person.

          "Asset Sale" means: (i) the sale, lease, conveyance or other
disposition of any assets or rights; provided that the sale, lease, conveyance
or other disposition of all or substantially all of the assets of the Company
and its Restricted Subsidiaries taken as a whole will be governed by Sections
4.14 and/or 5.01 hereof and not by Section 4.10 hereof; and (ii) the issuance or
sale of Equity Interests by any of the Company's Restricted Subsidiaries or the
sale of Equity Interests in any of its Subsidiaries.

          Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales:

          (i) any single transaction or series of related transactions that
     involves assets having a fair market value of less than $5.0 million;

          (ii) a transfer of assets between or among the Company and its
     Restricted Subsidiaries;

          (iii) an issuance of Equity Interests by a Restricted Subsidiary to
     the Company or to another Restricted Subsidiary;

          (iv) the sale, lease, sub-lease, license, sub-license or consignment,
     as the case may be, of equipment, inventory, or other assets in the
     ordinary course of business, including leases with a duration of no greater
     than twenty-four months with respect to facilities which are temporarily
     not in use or pending their disposition;

          (v) the sale or other disposition of cash or Cash Equivalents;

          (vi) a Restricted Payment or Permitted Investment that is permitted by
     Section 4.07 hereof,

          (vii) the licensing of intellectual property to third Persons on
     customary terms as determined by the Board of Directors in good faith;

          (viii) any sale of accounts receivable, or participations therein, in
     connection with any Qualified Receivables Transaction;

          (ix) any sale or disposition of any property or equipment that has
     become damaged, worn-out, obsolete, condemned, given over in lieu of deed
     or otherwise unsuitable or not required for the ordinary course of the
     business of the Company and its Restricted Subsidiaries; and

          (x) any sale of Equity Interests in, or Indebtedness or other
     securities of, an Unrestricted Subsidiary.

          "Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments

                                       2



during the remaining term of the lease included in such sale and leaseback
transaction, including any period for which such lease has been extended or may,
at the option of the lessor, be extended. Such present value shall be calculated
using a discount rate equal to the rate of interest implicit in such transaction
determined in accordance with GAAP.

          "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.

          "Beneficial Owner" has the meaning assigned to such term in Rule l3d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.

          "Board of Directors" means (i) with respect to a corporation, the
board of directors of the corporation or committee thereof authorized to
exercise the power of the board of directors of such corporation; (ii) with
respect to a partnership, the Board of Directors of the general partner of the
partnership; and (iii) with respect to any other Person, the board or committee
of such Person serving a similar function.

          "Borrowing Base" means, as of any date, an amount equal to:

          (i) 80% of the face amount of all accounts receivable owned by the
     Company and its Restricted Subsidiaries as of the end of the most recent
     fiscal quarter preceding such date that were not more than 90 days past
     due; plus

          (ii) 50% of the book value of all inventory owned by the Company and
     its Restricted Subsidiaries of the end of the most recent fiscal quarter
     preceding such date;

all calculated on a consolidated basis and in accordance with GAAP.

          "Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.

          "Business Day" means any day other than a Legal Holiday.

          "Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.

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

                                       3



          "Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than 360 days from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with any domestic commercial bank having capital and surplus in excess of
$500,000,000, "a rating of "P-1" or better from Moody's Investor Service, Inc.
or "A-1" or better from Standard & Poor's Rating Services, (iv) repurchase
obligations for underlying securities of the types described in clauses (ii) and
(iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Rating Services and in each case maturing within six months after the
date of acquisition, and (vi) money market funds at least 95% of the assets of
which constitute Cash Equivalents of the kinds described in clauses (i) through
(v) of this definition.

          "Change of Control" means the occurrence of any of the following: (i)
the direct or indirect sale, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of the
Parent and its Restricted Subsidiaries or the Company and its Restricted
Subsidiaries, in each case, taken as a whole, to any "person" (as that term is
used in Section 13(d)(3) of the Exchange Act) other than the Principals or the
Related Parties of the Principals, (ii) the adoption of a plan relating to the
liquidation or dissolution of the Parent or the Company, (iii) the consummation
of any transaction (including, without limitation, any merger or consolidation),
the result of which is that any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Principals and
their Related Parties, becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the voting power of the Voting Stock of the Company or the
Parent, as the case may be; (iv) the first day on which a majority of the
members of the Board of Directors of the Parent or the Company are not
Continuing Directors, or (v) the Parent or the Company consolidates with, or
merges with or into, any Person, or any Person consolidates with, or merges with
or into, the Parent or the Company, in any such event pursuant to a transaction
in which any of the outstanding Voting Stock of the Parent, the Company or such
other Person is converted into or exchanged for cash, securities or other
property, other than any such transaction where (A) the Voting Stock of the
Parent or the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance) and (B) immediately after such
transaction, no "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Principals and their Related
Parties, becomes the Beneficial Owner, directly or indirectly, of more than 50%
of the voting power of the Voting Stock of the surviving or transferee person.

          "Clearstream" means Clearstream Banking, societe anonyme, Luxembourg.

          "Company" means Michael Foods, Inc., a Delaware corporation.

                                       4



          "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period and,
without duplication plus (i) provision for taxes based on income or profits of
such Person and its Restricted Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net Income;
plus (ii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether or not paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus (iii) depreciation, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; plus (iv) any
management fees paid by the Company to Vestar Capital Partners L.P. or the
Equity Sponsor, as the case may be, in such period, to the extent that any such
management fees were deducted in computing such Consolidated Net Income;
provided that the maximum aggregate amount of such management fees in any
12-month period shall not exceed the greater of $1.5 million and an amount equal
to 1.0% of the consolidated earnings before interest, taxes, depreciation and
amortization of the Company and its Subsidiaries for such period as computed in
the management agreements entered into in connection with the Mergers; minus (v)
non-cash items increasing such Consolidated Net Income for such period,
excluding any items which represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period.

          Notwithstanding the preceding, the provision for taxes based on the
income or profits of, and the depreciation and amortization and other non-cash
expenses of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute Consolidated Cash Flow of the Company only to
the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.

          "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

          (i) the Net Income of any Person that is not a Restricted Subsidiary
     or that is accounted for by the equity method of accounting shall be
     included only to the extent of

                                       5



     the amount of dividends or distributions paid in cash to the specified
     Person or a Restricted Subsidiary thereof;

          (ii) the Net Income of any Restricted Subsidiary shall be excluded to
     the extent that the declaration or payment of dividends or similar
     distributions by that Restricted Subsidiary of that Net Income is not at
     the date of determination permitted without any prior governmental approval
     (that has not been obtained) or, directly or indirectly, by operation of
     the terms of its charter or any agreement, instrument, judgment, decree,
     order, statute, rule or governmental regulation applicable to that
     Restricted Subsidiary or its stockholders;

          (iii) the Net Income (or loss) of any Person acquired in a pooling of
     interests transaction for any period prior to the date of such acquisition
     shall be excluded;

          (iv) the cumulative effect of a change in accounting principles shall
     be excluded;

          (v) any increase in cost of sales as a result of the step-up in
     inventory valuation arising from applying the purchase method of accounting
     in accordance with GAAP in connection with any acquisition consummated
     after the date hereof, net of taxes, shall be excluded;

          (vi) non-cash charges relating to employee benefit or other management
     compensation plans of the Parent (to the extent such non-cash charges
     relate to plans of the Parent for the benefit of members of the Board of
     Directors of the Company (in their capacity as such) or employees of the
     Company and its Restricted Subsidiaries), the Company or any of its
     Restricted Subsidiaries or any non-cash compensation charge arising from
     any grant of stock, stock options or other equity-based awards, of the
     Parent (to the extent such non-cash charges relate to plans of the Parent
     for the benefit of members of the Board of Directors of the Company (in
     their capacity as such) or employees of the Company and its Restricted
     Subsidiaries), the Company or any of its Restricted Subsidiaries (excluding
     any, in each case, non-cash charge to the extent that it represents an
     accrual of or reserve for cash expenses in any future period or
     amortization of a prepaid cash expense incurred in a prior period) in each
     case, to the extent that such non-cash charges are deducted in computing
     such Consolidated Net Income shall be excluded; and

          (vii) any goodwill impairment charges shall be excluded.

          "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company or the Parent, as the case may
be, who: (i) was a member of such Board of Directors on the date hereof or the
date of the Mergers; or (ii) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing Directors who
were members of such Board at the time of such nomination or election.

                                       6



          "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.

          "Credit Agreement" means that certain Credit Agreement, to be dated as
of the date hereof, by and among the Company, THL Food Products Holding Co.,
Bank of America, N.A., as Administrative Agent, Deutsche Bank Securities Inc.
and UBS Securities LLC, as Co-Syndication Agents, and the other Lenders named
therein providing for up to $495.0 million in term loan borrowings and $100.0
million of revolving credit borrowings, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced,
restated, substituted or refinanced in whole or in part from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.

          "Credit Facilities" means, one or more debt facilities (including,
without limitation, the Credit Agreement and the Senior Unsecured Term Loan
Agreement), commercial paper facilities or indentures, in each case with banks
or other institutional lenders or a trustee providing for revolving credit
loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables), letters of credit or issuances of notes,
in each case, as amended, modified, renewed, refunded, replaced, restated,
substituted or refinanced in whole or in part from time to time.

          "Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.

          "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

          "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto, except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.

          "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

          "Designated Senior Debt" means (i) any Indebtedness outstanding under
the Credit Agreement; and (ii) any other Senior Debt permitted hereunder the
principal amount of which that is committed and available to be drawn on is
$25.0 million or more and that has been designated by the Company as "Designated
Senior Debt." For purposes of determining whether

                                       7



a particular issue of Senior Debt may qualify as "Designated Senior Debt," the
principal amount of one or more issues of Senior Debt owing to a common lender
(or its Affiliates) may be aggregated.

          "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided that if such Capital Stock is issued to
any employee or to any plan for the benefit of employees of the Company or any
of its Subsidiaries or by any such plan to such employees, such Capital Stock
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Company or such Subsidiary in order to satisfy applicable
statutory or regulatory obligations; and provided further that any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof have
the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07.

          "Domestic Subsidiary" means any Restricted Subsidiary that was formed
under the laws of the United States or any state thereof or the District of
Columbia or that guarantees or otherwise provides direct credit support for any
Indebtedness of the Company.

          "Egg Products Division" means those operations and Subsidiaries of the
Company and its Restricted Subsidiaries which are principally engaged in the egg
products business.

          "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

          "Equity Offering" means an offering (including in a private placement)
of the Equity Interests (other than Disqualified Stock) of the Company or the
Parent, other than public offerings with respect to the Equity Interests
registered on Form S-8.

          "Equity Sponsor" means Thomas H. Lee Partners, L.P., a Delaware
limited partnership.

          "Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear system.

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

          "Exchange Notes" means the Notes issued in the Exchange Offer in
accordance with Section 2.06(f) hereof.

          "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.

                                       8



          "Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.

          "Excluded Contributions" means the net cash proceeds received by the
Company after the date of this Indenture from (a) contributions to its common
equity capital and (b) the sale (other than to a Subsidiary or to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement of the Company or any of its Subsidiaries) of Capital Stock
(other than Disqualified Stock) of the Company, in each case designated within
60 days of the receipt of such net cash proceeds as Excluded Contributions
pursuant to an Officers' Certificate, the cash proceeds of which are excluded
from the calculation set forth in clause (iii) of the second paragraph of
Section 4.07.

          "Existing Indebtedness" means Indebtedness outstanding on the date
hereof, other than under the Credit Agreement, the Senior Unsecured Term Loan
Agreement and this Indenture.

          "Fixed Charge Coverage Ratio" means, with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees, repays, repurchases or redeems any Indebtedness or issues,
repurchases or redeems Disqualified Stock or preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of Disqualified
Stock or preferred stock, and the use of the proceeds therefrom as if the same
had occurred at the beginning of the applicable four-quarter reference period.

          In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

          (i) the Recapitalization, Investments, acquisitions, dispositions,
     mergers, consolidations and discontinued operations (as determined in
     accordance with GAAP) that have been made by the Company or any Restricted
     Subsidiary of the Company during the four-quarter reference period or
     subsequent to such reference period and on or prior to or simultaneously
     with the Calculation Date shall be calculated on a pro forma basis
     including Pro Forma Cost Savings assuming that the Recapitalization and all
     such Investments, acquisitions, dispositions, mergers, consolidations and
     discontinued operations (and the change in any associated fixed charge
     obligations and the change in EBITDA resulting therefrom) had occurred on
     the first day of the four-quarter reference period. If since the beginning
     of such period any Person (that subsequently became a Restricted Subsidiary
     of the Company or was merged with or into the Company or any Restricted
     Subsidiary of the Company since the beginning of such period) shall have
     made any Investment, acquisition, disposition, merger, consolidation or
     discontinued operation that would have required adjustment pursuant to this
     definition, then the Fixed Charge Coverage Ratio shall be calculated giving
     pro forma effect thereto for such period

                                       9



     as if such Investment,acquisition, disposition, merger, consolidation or
     discontinued operation had occurred at the beginning of the applicable
     four-quarter period; and

          (ii) in calculating Fixed Charges attributable to interest on any
     Indebtedness computed on a pro forma basis, (a) interest on outstanding
     Indebtedness determined on a fluctuating basis as of the Calculation Date
     and which will continue to be so determined thereafter and shall be deemed
     to have accrued at a fixed rate per annum equal to the rate of interest on
     such Indebtedness in effect on the Calculation Date; (b) if interest on any
     Indebtedness actually incurred on the Calculation Date may optionally be
     determined at an interest rate based upon a factor of a prime or similar
     rate, a eurocurrency interbank offered rate, or other rates, then the
     interest rate in effect on the Calculation Date will be deemed to have been
     in effect during the four-quarter period; and (c) notwithstanding clause
     (a) above, interest on Indebtedness determined on a fluctuating basis, to
     the extent such interest is covered by agreements relating to interest rate
     swaps, caps or collars, shall be deemed to accrue at the rate per annum
     resulting after giving effect to the operation of such agreement.

          "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of: (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued, including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations; plus
(ii) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is called
upon; plus (iv) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock or Disqualified Stock
of such Person or any of its Restricted Subsidiaries, other than dividends on
Equity Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company,
times (b) a fraction, the numerator of which is one and the denominator of which
is one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.

          "Foreign Borrowing Base" means, as of any date, an amount equal to:

          (i) 80% of the face amount of all accounts receivable owned by the
     Foreign Restricted Subsidiaries as of the end of the most recent fiscal
     quarter preceding such date that were not more than 90 days past due; plus

          (ii) 50% of the book value of all inventory owned by the Foreign
     Restricted Subsidiaries as of the end of the most recent fiscal quarter
     preceding such date;

                                       10



all calculated on a consolidated basis and in accordance with GAAP.

          "Foreign Restricted Subsidiary" means any Restricted Subsidiary of the
Company incorporated in any jurisdiction outside the United States.

          "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect as of the date hereof.

          "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, issued in accordance
with certain sections of this Indenture.

          "Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

          "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.

          "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

          "Guarantors" means:

          (i) each direct or indirect Domestic Subsidiary of the Company; and

          (ii) any other subsidiary of the Company that provides a Note
     Guarantee in accordance with the provisions hereof;

and their respective successors and assigns.

          "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

          (i) interest rate swap agreements, interest rate cap agreements,
     interest rate collar agreements and other agreements or arrangements
     designed for the purpose of fixing, hedging or swapping interest rate risk,

          (ii) commodity swap agreements, commodity option agreements, forward
     contracts and other agreements or arrangements designed for the purpose of
     fixing, hedging or swapping commodity price risk, and

                                       11



          (iii) foreign exchange contracts, currency swap agreements and other
     agreements or arrangements designed for the purpose of fixing, hedging or
     swapping foreign currency exchange rate risk.

          "Holder" means a Person in whose name a Note is registered.

          "Holdings" means THL Food Products Holding Co., a Delaware corporation
and the immediate parent of the Company.

          "Immaterial Guarantor" means any Guarantor that is an Immaterial
Subsidiary.

          "Immaterial Subsidiary" means any Subsidiary of the Company that has
less than $100,000 in total assets.

          "IAI Global Note" means the global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

          "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:

          (i) borrowed money;

          (ii) evidenced by bonds, notes, debentures or similar instruments or
     letters of credit (or reimbursement agreements in respect thereof);

          (iii) banker's acceptances;

          (iv) Capital Lease Obligations;

          (v) the balance deferred and unpaid of the purchase price of any
     property, except any such balance that constitutes an accrued expense or
     trade payable; or

          (vi) any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.

          The amount of any Indebtedness outstanding as of any date shall be:

          (i) the accreted value thereof, in the case of any Indebtedness issued
     with original issue discount;

                                       12



          (ii) the principal amount thereof, together with any interest thereon
     that is more than 30 days past due, in the case of any other Indebtedness;
     and

          (iii) with respect to Indebtedness of another Person secured by a Lien
     on the assets of the Company or any of its Restricted Subsidiaries, the
     lesser of the fair market value of the property secured or the amount of
     the secured Indebtedness.

          "Indenture" means this Indenture, as amended or supplemented from time
to time.

          "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

          "Initial Notes" means $150,000,000 in aggregate principal amount of
Notes originally issued under this Indenture on the date hereof.

          "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who is not also a QIB.

          "Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made a Restricted Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07 hereof. The acquisition by the Company or any
Restricted Subsidiary of the Company of a Person that holds an Investment in a
third Person shall be deemed to be an Investment by the Company or such
Restricted Subsidiary in such third Person in an amount equal to the fair market
value of the Investment held by the acquired Person in such third Person in an
amount determined as provided in the final paragraph of Section 4.07 hereof.

          "Issue Date" means the date on which $150,000,000 in aggregate
principal amount of the Notes were originally issued under this Indenture.

          "Legal Holiday" means a Saturday, a Sunday or a day on which
commercial banks in The City of New York or at a place of payment are authorized
or required by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.

                                       13



          "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

          "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

          "Liquidated Damages" means the additional amounts (if any) payable by
the Company in the event of a Registration Default under, and as defined in, the
Registration Rights Agreement.

          "Merger Agreement" means the Agreement and Plan of Merger, dated as of
October 10, 2003, by and among Holdings, THL Food Products, M-Foods Holdings,
M-Foods Investors, LLC, as representative of the Stockholders identified
therein, and the Stockholders identified therein.

          "Mergers" means the merger of THL Food Products with and into M-Foods
Holdings, with M-Foods Holdings continuing as the surviving corporation, and the
subsequent merger of M-Foods Holdings with and into Michael Foods, with M-Foods
Holdings continuing as the surviving corporation and changing its name to
"Michael Foods, Inc.," all in accordance with the terms of the Merger Agreement.

          "M-Foods Holdings" means M-Foods Holdings, Inc., a Delaware
corporation.

          "Michael Foods" means Michael Foods, Inc., a Minnesota corporation.

          "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however (i) any
gain (or loss), together with any related provision for taxes on such gain (or
loss), realized in connection with: (a) any Asset Sale (without reference to the
$5.0 million limitation); or (b) the disposition of any other assets by such
Person or any of its Restricted Subsidiaries (other than in the ordinary course
of business) or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and (ii) any extraordinary, unusual or nonrecurring
gain (or loss) (including nonrecurring gains or losses of the Company and its
Subsidiaries incurred in connection with the Merger Agreement and the related
refinancing), together with any related provision for taxes on such
extraordinary, unusual or nonrecurring gain (or loss).

          "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale or disposition of such non-cash
consideration, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result thereof, taxes paid or

                                       14



payable as a result thereof, in each case, after taking into account any
available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness (other than
revolving credit Indebtedness, unless there is a required reduction in
commitments), secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any (1) reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP and (2) reserve or
payment with respect to any liabilities associated with such asset or assets and
retained by the Company after such sale or other disposition thereof, including,
without limitation, severance costs, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction.

          "Non-Recourse Debt" means Indebtedness:

          (i) as to which neither the Company nor any of its Restricted
     Subsidiaries (a) provides credit support of any kind (including any
     undertaking, agreement or instrument that would constitute Indebtedness),
     (b) is directly or indirectly liable as a guarantor or otherwise, or (c)
     constitutes the lender;

          (ii) no default with respect to which (including any rights that the
     holders thereof may have to take enforcement action against an Unrestricted
     Subsidiary) would permit upon notice, lapse of time or both any holder of
     any other Indebtedness (other than the Notes) of the Company or any of its
     Restricted Subsidiaries to declare a default on such other Indebtedness or
     cause the payment thereof to be accelerated or payable prior to its stated
     maturity; and

          (iii) as to which the lenders have been notified in writing that they
     will not have any recourse to the stock or assets of the Company or any of
     its Restricted Subsidiaries.

          "Non-U.S. Person" means a Person who is not a U.S. Person.

          "Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes, if any are issued, shall
be treated as a single class for all purposes under this Indenture.

          "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages, costs, expenses and other liabilities
payable under the documentation governing any Indebtedness.

          "Offering" means the offering of the Notes by the Company.

          "Offering Memorandum" means the offering memorandum, dated November 6,
2003, relating to the offering of the Notes.

          "Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.

                                       15



          "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer, or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.

          "Opinion of Counsel" means an opinion from legal counsel that meets
the requirements of Section 13.05 hereof. The counsel may be an employee of or
counsel to the Company.

          "Parent" means any direct or indirect parent company of the Company.

          "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).

          "Permitted Business" means any business conducted or proposed to be
conducted (as described in the Offering Memorandum) by the Company and its
Restricted Subsidiaries on the date hereof and other businesses reasonably
related or ancillary thereto.

          "Permitted Investments" means:

          (i) any Investment in the Company or in a Restricted Subsidiary of the
     Company;

          (ii) any Investment in Cash Equivalents;

          (iii) any Investment by the Company or any Restricted Subsidiary of
     the Company in a Person, if as a result of such Investment:

               (a) such Person becomes a Restricted Subsidiary of the Company;
          or

               (b) such Person is merged, consolidated or amalgamated with or
          into, or transfers or conveys substantially all of its assets to, or
          is liquidated into, the Company or a Restricted Subsidiary of the
          Company;

          (iv) any Investment made as a result of the receipt of non-cash
     consideration from an Asset Sale or other sale of assets that was made
     pursuant to and in compliance with Section 4.10 of this Indenture;

          (v) any Investment the payment for which consists of Equity Interests
     (other than Disqualified Stock) of the Company or the Parent (which
     Investment, in the case of the Parent, is contributed to the common equity
     capital of the Company; provided that any such contribution shall be
     excluded from Section 4.07(iii)(B) hereof).

          (vi) Hedging Obligations;

          (vii) other Investments in any Person having an aggregate fair market
     value (measured on the date each such Investment was made and without
     giving effect to

                                       16



     subsequent changes in value), when taken together with all other
     Investments made pursuant to this clause (vii) since the date hereof, not
     to exceed $20.0 million;

          (viii) any Investment of the Company or any of its Restricted
     Subsidiaries existing on the date hereof;

          (ix) loans to employees that are approved in good faith by a majority
     of the Board of Directors of the Company in an amount not to exceed $3.0
     million outstanding at any time;

          (x) any Investment acquired by the Company or any of its Restricted
     Subsidiaries:

               (a) in exchange for any other Investment or accounts receivable
          held by the Company or any such Restricted Subsidiary in connection
          with or as a result of a bankruptcy, workout, reorganization or
          recapitalization of a Person, or

               (b) as a result of a foreclosure by the Company or any of its
          Restricted Subsidiaries with respect to any secured Investment or
          other transfer of title with respect to any secured Investment in
          default;

          (xi) Investments consisting of the licensing or contribution of
     intellectual property pursuant to joint marketing arrangements with other
     Persons;

          (xii) Investments in joint ventures engaged in a Permitted Business
     not in excess of $20.0 million in the aggregate outstanding at any one
     time;

          (xiii) Investments by the Company or a Restricted Subsidiary of the
     Company in a Receivables Subsidiary or any Investment by a Receivables
     Subsidiary in any other Person, in each case, in connection with a
     Qualified Receivables Transaction; and

          (xiv) any Guarantee otherwise permitted hereunder.

          "Permitted Junior Securities" means (i) Equity Interests in the
Company or the Parent; or (ii) debt securities that are subordinated to all
Senior Debt and any debt securities issued in exchange for Senior Debt at least
to the same extent as, or to a greater extent than, the Notes and the Note
Guarantees are subordinated to Senior Debt as provided hereunder.

          "Permitted Liens" means:

          (i) Liens on the assets of the Company and any Guarantor securing
     Senior Debt that was permitted by the terms hereof to be incurred;

          (ii) Liens in favor of the Company or any Restricted Subsidiary of the
     Company;

          (iii) Liens on property of a Person existing at the time such Person
     is merged with or into or consolidated with the Company or any Restricted
     Subsidiary of the
                                       17



     Company; provided that such Liens were in existence prior to the
     contemplation of such merger or consolidation and do not extend to any
     assets other than those of the Person merged into or consolidated with the
     Company or the Restricted Subsidiary;

          (iv) Liens on property existing at the time of acquisition thereof by
     the Company or any Restricted Subsidiary of the Company; provided that such
     Liens were in existence prior to the contemplation of such acquisition and
     do not extend to any property other than the property so acquired by the
     Company or the Restricted Subsidiary;

          (v) Liens to secure Indebtedness (including Capital Lease Obligations)
     permitted by clause (iv) of Section 4.09 covering only the assets acquired
     with such Indebtedness;

          (vi) Liens of the Company and its Restricted Subsidiaries existing on
     the date hereof;

          (vii) Liens incurred in the ordinary course of business of the Company
     or any Restricted Subsidiary of the Company with respect to obligations
     that do not exceed $5.0 million at any one time outstanding;

          (viii) Liens to secure the performance of statutory obligations,
     surety or appeal bonds, performance bonds or other similar obligations
     (exclusive of obligations for the payment of borrowed money) incurred in
     the ordinary course of business;

          (ix) Liens upon specific items of inventory or other goods and
     proceeds of any Person securing such Person's obligations in respect of
     bankers' acceptances issued or created for the account of such Person to
     facilitate the purchase, shipment or storage of such inventory or other
     goods;

          (x) Liens incurred or deposits made in the ordinary course of business
     in connection with workers' compensation, unemployment insurance and other
     types of social security, including any Lien securing letters of credit
     issued in the ordinary course of business consistent with past practice in
     connection therewith;

          (xi) Liens to secure Indebtedness of any Foreign Restricted Subsidiary
     permitted by clause (xvi) of Section 4.09 covering only the assets of such
     Foreign Restricted Subsidiary; and

          (xii) Liens on assets of a Receivables Subsidiary arising in
     connection with a Qualified Receivables Transaction.

          "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

          (i) the principal amount (or accreted value, if applicable) of such
     Permitted Refinancing Indebtedness does not exceed the principal amount (or
     accreted value, if

                                       18



     applicable) of the Indebtedness so extended, refinanced, renewed, replaced,
     defeased or refunded (plus all accrued interest thereon and the amount of
     any reasonably determined premium and other amounts necessary to accomplish
     such refinancing and such reasonable fees and expenses incurred in
     connection therewith);

          (ii) such Permitted Refinancing Indebtedness has a final maturity date
     equal to or later than the final maturity date of, and has a Weighted
     Average Life to Maturity equal to or greater than the Weighted Average Life
     to Maturity of, the Indebtedness being extended, refinanced, renewed,
     replaced, defeased or refunded;

          (iii) if the Indebtedness being extended, refinanced, renewed,
     replaced, defeased or refunded is subordinated in right of payment to the
     Notes, such Permitted Refinancing Indebtedness has a final maturity date
     later than the final maturity date of, and is subordinated in right of
     payment to, the Notes on terms at least as favorable to the Holders of
     Notes as those contained in the documentation governing the Indebtedness
     being extended, refinanced, renewed, replaced, defeased or refunded; and

          (iv) such Indebtedness is incurred either by the Company or by the
     Restricted Subsidiary who is the obligor on the Indebtedness being
     extended, refinanced, renewed, replaced, defeased or refunded.

          "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

          "Principals" means the Equity Sponsor and its Affiliates.

          "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued hereunder except where otherwise
permitted by the provisions of this Indenture.

          "Pro Forma Cost Savings" means, with respect to any period, the
reduction in net costs and related adjustments that (i) were directly
attributable to an Asset Acquisition that occurred during the four-quarter
period or after the end of the four-quarter period and on or prior to the
Calculation Date and calculated on a basis that is consistent with Regulation
S-X under the Securities Act as in effect and applied as hereof, (ii) were
actually implemented by the business that was the subject of any such Asset
Acquisition within six months after the date of the Asset Acquisition and prior
to the Calculation Date that are supportable and quantifiable by the underlying
accounting records of such business or (iii) relate to the business that is the
subject of any such Asset Acquisition and that the Company reasonably determines
are probable based upon specifically identifiable actions to be taken within six
months of the date of the Asset Acquisition and, in the case of each of (i),
(ii) and (iii), are described, as provided below, in an Officer's Certificate,
as if all such reductions in costs had been effected as of the beginning of such
period. Pro Forma Cost Savings described above shall be accompanied by a
certificate delivered to the Trustee from the Company's Chief Financial Officer
that outlines the specific actions taken or to be taken, the net cost savings
achieved or to be achieved from each such

                                       19



action and that, in the case of clause (iii) above, such savings have been
determined to be probable.

          "Public Equity Offering" means an offer and sale for cash of common
stock (other than Disqualified Stock) of the Company or the Parent pursuant to a
registration statement that has been declared effective by the SEC pursuant to
the Securities Act (other than a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company).

          "Purchase Money Note" means a promissory note evidencing a line of
credit, or evidencing other Indebtedness, owed to the Company or any Restricted
Subsidiary of the Company in connection with a Qualified Receivables
Transaction, which note shall be repaid from cash available to the maker of such
note, other than amounts required to be established as reserves pursuant to
agreement, amounts paid to investors in respect of interest, principal and other
amounts owning to such investors and amounts paid in connection with the
purchase of newly generated receivables.

          "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

          "Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or by any Restricted
Subsidiary of the Company pursuant to which the Company or any Restricted
Subsidiary of the Company may sell, convey or otherwise transfer to a
Receivables Subsidiary, any accounts receivable (whether now existing or arising
in the future) of the Company or any Restricted Subsidiary of the Company and
any asset related thereto, including, without limitation, all collateral
securing such accounts receivable, and all guarantees or other obligations in
respect of such accounts receivable, proceeds of such accounts receivable and
other assets that are customarily transferred, or in respect of which security
interests are customarily granted, in connection with an asset securitization
transaction involving accounts receivable.

          "Recapitalization" means the Mergers and all related transactions as
described in the Offering Memorandum.

          "Receivables Subsidiary" means a Subsidiary of the Company (other than
a Guarantor) that engages in no activities other than in connection with the
financing of accounts receivables and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Company or any other Restricted Subsidiary of
the Company (excluding guarantees of obligations (other than the principal of,
and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Company or any other
Restricted Subsidiary of the Company in any other way other than pursuant to
Standard Securitization Undertakings or (iii) subjects any property or asset of
the Company or any other Restricted Subsidiary of the Company, directly or
indirectly, contingently or otherwise to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings, (b) with which neither the
Company nor any other Restricted Subsidiary of the Company has any material
contract, agreement, arrangement or understanding (except in connection with a
Purchase Money Note or Qualified Receivables Transaction) other

                                       20



than on terms no less favorable to the Company or such other Restricted
Subsidiary of the Company than those that might be obtained at the time from
Persons that are not Affiliates of the Company, other than fees payable in the
ordinary course of business in connection with servicing accounts receivable,
and (c) to which neither the Company nor any other Restricted Subsidiary of the
Company has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve a certain level of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the resolution of
the Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying to the best of such officer's knowledge and
belief after consulting with counsel, that such designation complied with the
foregoing conditions.

          "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 20, 2003, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.

          "Regulation S" means Regulation S promulgated under the Securities
Act.

          "Regulation S Global Note" means a global Note bearing the Global Note
Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes resold in
reliance on Rule 904 of Regulation S.

          "Related Party" means (i) any controlling stockholder, partner,
member, 80% (or more) owned Subsidiary, or immediate family member (in the case
of an individual) of any Principal; or (ii) any trust, corporation, partnership
or other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of any
one or more Principals and/or such other Persons referred to in the immediately
preceding clause (i).

          "Replacement Assets" means (1) non-current tangible assets that will
be used or useful in a Permitted Business or (2) all or substantially all of the
assets of a Permitted Business or a majority of the Voting Stock of any Person
engaged in a Permitted Business that will become on the date of acquisition
thereof a Restricted Subsidiary.

          "Representative" means the Trustee, administrative agent, agent or
representative for any Senior Debt.

          "Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and

                                       21



familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.

          "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

          "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

          "Restricted Investment" means any Investment other than a Permitted
Investment.

          "Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.

          "Rule 144" means Rule 144 promulgated under the Securities Act.

          "Rule 144A" means Rule 144A promulgated under the Securities Act.

          "Rule 903" means Rule 903 promulgated under the Securities Act.

          "Rule 904" means Rule 904 promulgated the Securities Act.

          "SEC" means the Securities and Exchange Commission.

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

          "Senior Debt" means:

          (i) all Indebtedness of the Company or any Guarantor outstanding under
     the Credit Agreement and the Senior Unsecured Term Loan Agreement and all
     Hedging Obligations with respect thereto whether outstanding on the date
     hereof or incurred thereafter;

          (ii) any other Indebtedness of the Company or any Guarantor permitted
     to be incurred under the terms hereof, unless the instrument under which
     such Indebtedness is incurred expressly provides that it is on a parity
     with or subordinated in right of payment to the Notes or any Note
     Guarantee; and

          (iii) all Obligations with respect to the items listed in the
     preceding clauses (i) and (ii) (including any interest accruing subsequent
     to the filing of a petition of bankruptcy at the rate provided for in the
     documentation with respect thereto, whether or not such interest is an
     allowed claim under applicable law).

          Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include:

          (i) any liability for federal, state, local or other taxes owed or
     owing by the Company;

                                       22



          (ii) any Indebtedness of the Company to any of its Subsidiaries or
     other Affiliates;

          (iii) any trade payables; or

          (iv) the portion of any Indebtedness that is incurred in violation of
     this Indenture.

          In the case of Indebtedness incurred under Section 4.09(i)(b) hereof,
an Officers' Certificate of the Company as to the amount of the Borrowing Base
shall be conclusive absent manifest error for purposes of clause (iv) above.

          "Senior Unsecured Term Loan Agreement" means that certain Senior
Unsecured Term Loan Agreement, to be dated as of the date of the Indenture, by
and among the Company, THL Food Products Holding Co., Bank of America, N.A., as
Administrative Agent, Deutsche Bank Securities Inc. and UBS Securities LLC, as
Co-Syndication Agents, and the other Lenders named therein providing for up to
$135.0 million in term loan borrowings including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced,
restated, substituted or refinanced in whole or in part from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.

          "Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.

          "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.

          "Standard Securities Undertaking" means representations, warranties,
covenants and indemnities entered into by the Company or any Restricted
Subsidiary of the Company that are reasonably customary in an accounts
receivable transaction.

          "Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

          "Subsidiary" means, with respect to any specified Person: (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a

                                       23



combination thereof); and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).

          "Surviving Corporation" means the Surviving Corporation (as defined in
the Merger Agreement) upon consummation of the subsequent merger contemplated by
Section 8.06 of the Merger Agreement.

          "Technology Agreement" means the Technology Agreement among Papetti's
Hygrade Egg Products, Inc. a New Jersey corporation and Raztek Corporation, a
California corporation dated June 12, 1991 as amended through the date hereof
and as may be amended, modified, replaced or restated from time to time
hereafter.

          "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
(S)(S) 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.

          "THL Food Products" means THL Food Products Co., a Delaware
corporation.

          "Total Net Tangible Assets" means the total consolidated net assets,
less goodwill and intangibles, of the Company and its Restricted Subsidiaries,
as shown on the most recent balance sheet of the Company.

          "Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

          "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.

          "Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.

          "Unrestricted Subsidiary" means any Subsidiary (other than any
Subsidiary in the Egg Products Division) of the Company that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary:

          (i) has no Indebtedness other than Non-Recourse Debt;

          (ii) is not party to any agreement, contract, arrangement or
     understanding with the Company or any Restricted Subsidiary of the Company
     unless the terms of any such agreement, contract, arrangement or
     understanding are no less favorable to the Company or such Restricted
     Subsidiary than those that might be obtained at the time from Persons who
     are not Affiliates of the Company;

                                       24



          (iii) is a Person with respect to which neither the Company nor any of
     its Restricted Subsidiaries has any direct or indirect obligation (a) to
     subscribe for additional Equity Interests or (b) to maintain or preserve
     such Person's financial condition or to cause such Person to achieve any
     specified levels of operating results;

          (iv) is a guarantor or otherwise directly or indirectly provides
     credit support for any Indebtedness of the Company or any of its Restricted
     Subsidiaries at the time of such designation unless such guarantee or
     credit support is released upon such designation; and

          (v) has at least one director on its Board of Directors that is not a
     director or executive officer of the Company or any of its Restricted
     Subsidiaries and has at least one executive officer that is not a director
     or executive officer of the Company or any of its Restricted Subsidiaries.

Any designation of a Restricted Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07. If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes hereof and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
Section 4.09, the Company shall be in default hereunder.

          "U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.

          "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

          "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.

          SECTION   1.02. Other Definitions.

                                                                      Defined in
Term                                                                   Section
- ----                                                                  ----------
"Affiliate Transaction"............................................      4.11
"Asset Sale Offer".................................................      4.10
"Authentication Order".............................................      2.02
"Change of Control Offer"..........................................      4.14
"Change of Control Payment"........................................      4.14

                                       25



"Change of Control Payment Date"...................................      4.14
"Covenant Defeasance"..............................................      8.03
"DTC"..............................................................      2.03
"Event of Default".................................................      6.01
"Excess Proceeds" .................................................      4.10
"incur"............................................................      4.09
"Legal Defeasance".................................................      8.02
"Note Guarantee"...................................................     11.01
"Offer Amount".....................................................      3.09
"Offer Period".....................................................      3.09
"Paying Agent".....................................................      2.03
"Payment Blockage Notice"..........................................     10.03
"Payment Blockage Period"..........................................     10.03
"Permitted Debt"...................................................      4.09
"Purchase Date"....................................................      3.09
"Registrar"........................................................      2.03
"Repurchase Offer".................................................      3.09
"Restricted Payments"..............................................      4.07

          SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

          The following TIA terms used in this Indenture have the following
meanings:

          "indenture securities" means the Notes;

          "indenture security Holder" means a Holder of a Note;

          "indenture to be qualified" means this Indenture;

          "indenture trustee" or "institutional trustee" means the Trustee; and

          "obligor" on the Notes means the Company and any successor obligor
upon the Notes.

          All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

          SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:

          a term has the meaning assigned to it;

          an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;

          "or" is not exclusive;

                                       26



          words in the singular include the plural, and in the plural include
the singular;

          provisions apply to successive events and transactions; and

          references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules adopted
by the SEC from time to time.

                                    ARTICLE 2

                                    THE NOTES

          SECTION 2.01. Form and Dating. (a) General. The Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A hereto. The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.

          The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

          (b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.

          (c) Euroclear and Clearstream Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream
Banking" and "Customer Handbook" of Clearstream shall be applicable to transfers
of beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Clearstream.

          SECTION 2.02. Execution and Authentication. One Officer shall sign the
Notes for the Company by manual or facsimile signature.

                                       27



          If the Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.

          A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated in accordance with the terms of this Indenture.

          The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue with
an unlimited principal amount, of which $150 million will be issued as Initial
Notes on the date hereof. Such Authentication Order shall specify the amount of
the Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated.

          The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

          SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall promptly notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.

          The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

          The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

          SECTION 2.04. Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent shall hold in trust for the benefit of Holders or the Trustee all
money held by the Paying Agent for the payment of principal, premium or
Liquidated Damages, if any, or interest on the Notes, and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Restricted Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the

                                       28



benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to the Company, the Trustee shall serve
as Paying Agent for the Notes.

          SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders and shall otherwise comply with TIA (S)
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA (S)
312(a).

          SECTION 2.06. Transfer and Exchange. (a) Transfer and Exchange of
Global Notes. A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes shall be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee notice from the Depositary that
it is unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee or (iii) there shall have occurred and be continuing a Default or
Event of Default with respect to the Notes. Upon the occurrence of any of the
preceding events in (i), (ii) or (iii) above, Definitive Notes shall be issued
in such names as the Depositary shall instruct the Trustee. Global Notes also
may be exchanged or replaced, in whole or in part, as provided in Sections 2.07
and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in
lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.

          (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

          (i) Transfer of Beneficial Interests in the Same Global Note.
     Beneficial interests in any Restricted Global Note may be transferred to
     Persons who take delivery thereof in the form of a beneficial interest in
     the same Restricted Global Note in accordance with the transfer
     restrictions set forth in the Private Placement Legend. Beneficial
     interests in any Unrestricted Global Note may be transferred to Persons who

                                       29



     take delivery thereof in the form of a beneficial interest in an
     Unrestricted Global Note. No written orders or instructions shall be
     required to be delivered to the Registrar to effect the transfers described
     in this Section 2.06(b)(i).

          (ii) All Other Transfers and Exchanges of Beneficial Interests in
     Global Notes. In connection with all transfers and exchanges of beneficial
     interests that are not subject to Section 2.06(b)(i) above, the transferor
     of such beneficial interest must deliver to the Registrar either (1) a
     written order from a Participant or an Indirect Participant given to the
     Depositary in accordance with the Applicable Procedures directing the
     Depositary to credit or cause to be credited a beneficial interest in the
     Global Note in an amount equal to the beneficial interest to be transferred
     or exchanged and (2) instructions given in accordance with the Applicable
     Procedures containing information regarding the Participant account to be
     credited with such increase or (1) a written order from a Participant or an
     Indirect Participant given to the Depositary in accordance with the
     Applicable Procedures directing the Depositary to cause to be issued a
     Definitive Note in an amount equal to the beneficial interest to be
     transferred or exchanged and (2) instructions given by the Depositary to
     the Registrar containing information regarding the Person in whose name
     such Definitive Note shall be registered to effect the transfer or exchange
     referred to in (1) above. Upon consummation of an Exchange Offer by the
     Company in accordance with Section 2.06(f) hereof, the requirements of this
     Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by
     the Registrar of the instructions contained in the Letter of Transmittal
     delivered by the Holder of such beneficial interests in the Restricted
     Global Notes. Upon satisfaction of all of the requirements for transfer or
     exchange of beneficial interests in Global Notes contained in this
     Indenture and the Notes or otherwise applicable under the Securities Act,
     the Trustee shall adjust the principal amount of the relevant Global
     Note(s) pursuant to Section 2.06(h) hereof.

          (iii) Transfer of Beneficial Interests to Another Restricted Global
     Note. A beneficial interest in any Restricted Global Note may be
     transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in another Restricted Global Note if the transfer
     complies with the requirements of Section 2.06(b)(ii) above and the
     Registrar receives the following:

               (A) if the transferee shall take delivery in the form of a
          beneficial interest in the 144A Global Note, then the transferor must
          deliver a certificate in the form of Exhibit B hereto, including the
          certifications in item (1) thereof; and

               (B) if the transferee shall take delivery in the form of a
          beneficial interest in the Regulation S Global Note, then the
          transferor must deliver a certificate in the form of Exhibit B hereto,
          including the certifications in item (2) thereof.

          (iv) Transfer and Exchange of Beneficial Interests in a Restricted
     Global Note for Beneficial Interests in the Unrestricted Global Note. A
     beneficial interest in any Restricted Global Note may be exchanged by any
     holder thereof for a beneficial interest in an Unrestricted Global Note or
     transferred to a Person who takes delivery thereof in

                                       30



     the form of a beneficial interest in an Unrestricted Global Note if the
     exchange or transfer complies with the requirements of Section 2.06(b)(ii)
     above and:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the holder of the beneficial interest to be transferred, in the
          case of an exchange, or the transferee, in the case of a transfer,
          certifies in the applicable Letter of Transmittal that it is not (1) a
          broker-dealer, (2) a Person participating in the distribution of the
          Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
          144) of the Company;

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (1) if the holder of such beneficial interest in a
               Restricted Global Note proposes to exchange such beneficial
               interest for a beneficial interest in an Unrestricted Global
               Note, a certificate from such holder in the form of Exhibit C
               hereto, including the certifications in item (1)(a) thereof; or

                    (2) if the holder of such beneficial interest in a
               Restricted Global Note proposes to transfer such beneficial
               interest to a Person who shall take delivery thereof in the form
               of a beneficial interest in an Unrestricted Global Note, a
               certificate from such holder in the form of Exhibit B hereto,
               including the certifications in item (4) thereof;

          and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities Act.

          If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

          Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.

                                       31



          (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive
Notes. If any holder of a beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Restricted Definitive Note, then, upon receipt by the Registrar
of the following documentation:

          (A) if the holder of such beneficial interest in a Restricted Global
     Note proposes to exchange such beneficial interest for a Restricted
     Definitive Note, a certificate from such holder in the form of Exhibit C
     hereto, including the certifications in item (2)(a) thereof;

          (B) if such beneficial interest is being transferred to a QIB in
     accordance with Rule 144A under the Securities Act, a certificate to the
     effect set forth in Exhibit B hereto, including the certifications in item
     (1) thereof;

          (C) if such beneficial interest is being transferred to a Non-U.S.
     Person in an offshore transaction in accordance with Rule 903 or Rule 904
     under the Securities Act, a certificate to the effect set forth in Exhibit
     B hereto, including the certifications in item (2) thereof;

          (D) if such beneficial interest is being transferred pursuant to an
     exemption from the registration requirements of the Securities Act in
     accordance with Rule 144 under the Securities Act, a certificate to the
     effect set forth in Exhibit B hereto, including the certifications in item
     (3)(a) thereof;

          (E) if such beneficial interest is being transferred to an
     Institutional Accredited Investor in reliance on an exemption from the
     registration requirements of the Securities Act other than those listed in
     subparagraphs (B) through (D) above, a certificate to the effect set forth
     in Exhibit B hereto, including the certifications, certificates and Opinion
     of Counsel required by item (3) thereof, if applicable;

          (F) if such beneficial interest is being transferred to the Company or
     any of its Subsidiaries, a certificate to the effect set forth in Exhibit B
     hereto, including the certifications in item (3)(b) thereof; or

          (G) if such beneficial interest is being transferred pursuant to an
     effective registration statement under the Securities Act, a certificate to
     the effect set forth in Exhibit B hereto, including the certifications in
     item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the

                                       32



Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.

          (ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global Note
may exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:

          (A) such exchange or transfer is effected pursuant to the Exchange
     Offer in accordance with the Registration Rights Agreement and the holder
     of such beneficial interest, in the case of an exchange, or the transferee,
     in the case of a transfer, certifies in the applicable Letter of
     Transmittal that it is not (1) a broker-dealer, (2) a Person participating
     in the distribution of the Exchange Notes or (3) a Person who is an
     affiliate (as defined in Rule 144) of the Company;

          (B) such transfer is effected pursuant to the Shelf Registration
     Statement in accordance with the Registration Rights Agreement;

          (C) such transfer is effected by a Broker-Dealer pursuant to the
     Exchange Offer Registration Statement in accordance with the Registration
     Rights Agreement; or

          (D) the Registrar receives the following:

               (1) if the holder of such beneficial interest in a Restricted
          Global Note proposes to exchange such beneficial interest for a
          Definitive Note that does not bear the Private Placement Legend, a
          certificate from such holder in the form of Exhibit C hereto,
          including the certifications in item (1)(b) thereof; or

               (2) if the holder of such beneficial interest in a Restricted
          Global Note proposes to transfer such beneficial interest to a Person
          who shall take delivery thereof in the form of a Definitive Note that
          does not bear the Private Placement Legend, a certificate from such
          holder in the form of Exhibit B hereto, including the certifications
          in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

          (iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h)

                                       33



hereof, and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in
such name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.
The Trustee shall deliver such Definitive Notes to the Persons in whose names
such Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the
Private Placement Legend.

          (d) Transfer and Exchange of Definitive Notes for Beneficial
Interests. (i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt by
the Registrar of the following documentation:

          (A) if the Holder of such Restricted Definitive Note proposes to
     exchange such Note for a beneficial interest in a Restricted Global Note, a
     certificate from such Holder in the form of Exhibit C hereto, including the
     certifications in item (2)(b) thereof;

          (B) if such Restricted Definitive Note is being transferred to a QIB
     in accordance with Rule 144A under the Securities Act, a certificate to the
     effect set forth in Exhibit B hereto, including the certifications in item
     (1) thereof;

          (C) if such Restricted Definitive Note is being transferred to a
     Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
     Rule 904 under the Securities Act, a certificate to the effect set forth in
     Exhibit B hereto, including the certifications in item (2) thereof;

          (D) if such Restricted Definitive Note is being transferred pursuant
     to an exemption from the registration requirements of the Securities Act in
     accordance with Rule 144 under the Securities Act, a certificate to the
     effect set forth in Exhibit B hereto, including the certifications in item
     (3)(a) thereof;

          (E) if such Restricted Definitive Note is being transferred to an
     Institutional Accredited Investor in reliance on an exemption from the
     registration requirements of the Securities Act other than those listed in
     subparagraphs (B) through (D) above, a certificate to the effect set forth
     in Exhibit B hereto, including the certifications, certificates and Opinion
     of Counsel required by item (3) thereof, if applicable;

          (F) if such Restricted Definitive Note is being transferred to the
     Company or any of its Subsidiaries, a certificate to the effect set forth
     in Exhibit B hereto, including the certifications in item (3)(b) thereof;
     or

          (G) if such Restricted Definitive Note is being transferred pursuant
     to an effective registration statement under the Securities Act, a
     certificate to the effect set forth in Exhibit B hereto, including the
     certifications in item (3)(c) thereof,

                                       34



the Trustee shall cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global Note,
and in all other cases, the IAI Global Note.

          (ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange
such Note for a beneficial interest in an Unrestricted Global Note or transfer
such Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note only if:

          (A) such exchange or transfer is effected pursuant to the Exchange
     Offer in accordance with the Registration Rights Agreement and the Holder,
     in the case of an exchange, or the transferee, in the case of a transfer,
     certifies in the applicable Letter of Transmittal that it is not (1) a
     broker-dealer, (2) a Person participating in the distribution of the
     Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
     of the Company;

          (B) such transfer is effected pursuant to the Shelf Registration
     Statement in accordance with the Registration Rights Agreement;

          (C) such transfer is effected by a Broker-Dealer pursuant to the
     Exchange Offer Registration Statement in accordance with the Registration
     Rights Agreement; or

          (D) the Registrar receives the following:

               (1) if the Holder of such Definitive Notes proposes to exchange
          such Notes for a beneficial interest in the Unrestricted Global Note,
          a certificate from such Holder in the form of Exhibit C hereto,
          including the certifications in item (1)(c) thereof; or

               (2) if the Holder of such Definitive Notes proposes to transfer
          such Notes to a Person who shall take delivery thereof in the form of
          a beneficial interest in the Unrestricted Global Note, a certificate
          from such Holder in the form of Exhibit B hereto, including the
          certifications in item (4) thereof;

     and, in each such case set forth in this subparagraph (D), if the Registrar
     so requests or if the Applicable Procedures so require, an Opinion of
     Counsel in form reasonably acceptable to the Registrar to the effect that
     such exchange or transfer is in compliance with the Securities Act and that
     the restrictions on transfer contained herein and in the Private Placement
     Legend are no longer required in order to maintain compliance with the
     Securities Act.

          Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.

                                       35



          (iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee shall cancel
the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.

          If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.

          (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

          (i) Transfer of Restricted Definitive Notes to Restricted Definitive
     Notes.Any Restricted Definitive Note may be transferred to and registered
     in the name of Persons who take delivery thereof in the form of a
     Restricted Definitive Note if the Registrar receives the following:

               (A) if the transfer shall be made pursuant to Rule 144A under the
          Securities Act, then the transferor must deliver a certificate in the
          form of Exhibit B hereto, including the certifications in item (1)
          thereof;

               (B) if the transfer shall be made pursuant to Rule 903 or Rule
          904, then the transferor must deliver a certificate in the form of
          Exhibit B hereto, including the certifications in item (2) thereof;
          and

               (C) if the transfer shall be made pursuant to any other exemption
          from the registration requirements of the Securities Act, then the
          transferor must deliver a certificate in the form of Exhibit B hereto,
          including the certifications, certificates and Opinion of Counsel
          required by item (3) thereof, if applicable.

          (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
     Restricted Definitive Note may be exchanged by the Holder thereof for an
     Unrestricted Definitive Note or transferred to a Person or Persons who take
     delivery thereof in the form of an Unrestricted Definitive Note if:

                                       36



               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the Holder, in the case of an exchange, or the transferee, in the
          case of a transfer, certifies in the applicable Letter of Transmittal
          that it is not (1) a broker-dealer, (2) a Person participating in the
          distribution of the Exchange Notes or (3) a Person who is an affiliate
          (as defined in Rule 144) of the Company;

               (B) any such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

               (C) any such transfer is effected by a Broker-Dealer pursuant to
          the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (1) if the Holder of such Restricted Definitive Notes
               proposes to exchange such Notes for an Unrestricted Definitive
               Note, a certificate from such Holder in the form of Exhibit C
               hereto, including the certifications in item (1)(d) thereof; or

                    (2) if the Holder of such Restricted Definitive Notes
               proposes to transfer such Notes to a Person who shall take
               delivery thereof in the form of an Unrestricted Definitive Note,
               a certificate from such Holder in the form of Exhibit B hereto,
               including the certifications in item (4) thereof,

          and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.

          (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
     A Holder of Unrestricted Definitive Notes may transfer such Notes to a
     Person who takes delivery thereof in the form of an Unrestricted Definitive
     Note. Upon receipt of a request to register such a transfer, the Registrar
     shall register the Unrestricted Definitive Notes pursuant to the
     instructions from the Holder thereof.

          (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
Broker-Dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of

                                       37



the Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.

          (g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

          (i) Private Placement Legend. (A) Except as permitted by subparagraph
     (B) below, each Global Note and each Definitive Note (and all Notes issued
     in exchange therefor or substitution thereof) shall bear the legend in
     substantially the following form:

     "THIS NOTE AND ANY GUARANTEES OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
     SECURITIES LAWS. NEITHER THIS NOTE NOR ANY GUARANTEES OF THIS NOTE NOR ANY
     INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
     TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
     SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
     TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
     NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
     SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
     ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
     AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF
     THIS NOTE AND ANY GUARANTEES OF THIS NOTE) (THE "RESALE RESTRICTION
     TERMINATION DATE") ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
     PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
     (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
     UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
     IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
     FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
     TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
     144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
     OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
     SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
     REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
     AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
     PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION
     COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
     ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION TERMINATION
     DATE TO REQUIRE THE

                                       38



     DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
     SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO
     REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE
     IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND
     WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
     TERMINATION DATE."

               (B) Notwithstanding the foregoing, any Global Note or Definitive
          Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
          (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
          all Notes issued in exchange therefor or substitution thereof) shall
          not bear the Private Placement Legend.

          (ii) Global Note Legend. Each Global Note shall bear a legend in
     substantially the following form:

     "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
     GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
     BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
     CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
     MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
     NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
     OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
     FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
     GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
     WRITTEN CONSENT OF THE COMPANY."

          (h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who shall take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who shall take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

          (i) General Provisions Relating to Transfers and Exchanges. (i) To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall

                                       39



authenticate Global Notes and Definitive Notes upon the Company's order or at
the Registrar's request.

          (ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 3.09, 4.10, 4.14 and 9.05 hereof).

          (iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.

          (iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid and legally binding obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer or
exchange.

          (v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under
Section 3.02 hereof and ending at the close of business on the day of selection,
(B) to register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part or (C) to register the transfer of or to exchange a Note
between a record date and the next succeeding Interest Payment Date.

          (vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and for
all other purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.

          (vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.

          (viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by facsimile with
the original to follow by first class mail.

          SECTION 2.07. Replacement Notes. If any mutilated Note is surrendered
to the Trustee or the Company and the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon receipt of an Authentication Order, shall
authenticate a replacement Note if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the

                                       40



Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.

          Every replacement Note issued pursuant to this Section 2.07 is an
additional obligation of the Company and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes duly
issued hereunder.

          SECTION 2.08. Outstanding Notes. The Notes outstanding at any time are
all the Notes authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 2.09 hereof, a Note does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Note; however, Notes held by the
Company or a Subsidiary of the Company shall not be deemed to be outstanding for
purposes of Section 3.07(b) hereof.

          If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

          If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

          If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

          SECTION 2.09. Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee knows are so
owned shall be so disregarded.

          SECTION 2.10. Temporary Notes. Until certificates representing Notes
are ready for delivery, the Company may prepare and the Trustee, upon receipt of
an Authentication Order, shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of certificated Notes but may have variations
that the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.

          Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

                                       41



          SECTION 2.11. Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall dispose of such canceled Notes in its customary manner. Subject to Section
2.07, the Company may not issue new Notes to replace Notes that it has paid or
that have been delivered to the Trustee for cancellation.

          SECTION 2.12. Defaulted Interest. If the Company defaults in a payment
of interest on the Notes, it shall pay the defaulted interest in any lawful
manner plus, to the extent lawful, interest payable on the defaulted interest,
to the Persons who are Holders on a subsequent special record date, in each case
at the rate provided in the Notes and in Section 4.01 hereof. The Company shall
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Note and the date of the proposed payment. The Company shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.

          SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the "CUSIP" numbers.

          SECTION 2.14. Issuance of Additional Notes. The Company may, subject
to Article 4 of this Indenture and applicable law, issue Additional Notes. The
Notes issued on the Issue Date and any Additional Notes subsequently issued
shall be treated as a single class for all purposes under this Indenture.

                                    ARTICLE 3

                            REDEMPTION AND PREPAYMENT

          SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it
shall furnish to the Trustee, at least 35 days but not more than 60 days before
a redemption date (unless a shorter notice period shall be satisfactory to the
Trustee in its reasonable discretion), an Officers' Certificate setting forth
(i) the clause of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed and
(iv) the redemption price.

                                       42



          SECTION 3.02. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, selection of Notes for redemption
shall be made by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed,
or, if the Notes are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate. In the event of partial
redemption by lot, the particular Notes to be redeemed shall be selected, unless
otherwise provided herein, not less than 35 nor more than 60 days prior to the
redemption date by the Trustee (unless a shorter time period shall be
satisfactory to the Trustee) from the outstanding Notes not previously called
for redemption.

          The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

          SECTION 3.03. Notice of Redemption. Subject to the provisions of
Section 3.09 hereof, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Notes are to be redeemed at
its registered address, except that redemption notices may be mailed more than
60 days prior to a redemption date if the notice is issued in connection with a
defeasance of the Notes in accordance with Article 8 hereof or a satisfaction
and discharge of the Indenture in accordance with Article 12 hereof.

          The notice shall identify the Notes to be redeemed and shall state:

          (a) the redemption date;

          (b) the redemption price;

          (c) if any Note is being redeemed in part, the portion of the
     principal amount of such Note to be redeemed and that, after the redemption
     date upon surrender of such Note, a new Note or Notes in principal amount
     equal to the unredeemed portion shall be issued upon cancellation of the
     original Note;

          (d) the name and address of the Paying Agent;

          (e) that Notes called for redemption must be surrendered to the Paying
     Agent to collect the redemption price and become due on the date fixed for
     redemption;

          (f) that, unless the Company defaults in making such redemption
     payment, interest on Notes called for redemption ceases to accrue on and
     after the redemption date;

          (g) the paragraph of the Notes and/or Section of this Indenture
     pursuant to which the Notes called for redemption are being redeemed; and

                                       43



          (h) that no representation is made as to the correctness or accuracy
     of the CUSIP number, if any, listed in such notice or printed on the Notes.

          At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph. The notice, if mailed in the manner provided herein
shall be presumed to have been given, whether or not the Holder receives such
notice.

          SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.

          SECTION 3.05. Deposit of Redemption Price. One Business Day prior to
the redemption date, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.

          If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.

          SECTION 3.06. Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall issue and, upon the Company's written
request, the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.

          SECTION 3.07. Optional Redemption. (a) Except as set forth in clauses
(b) and (c) of this Section 3.07, the Notes shall not be redeemable at the
Company's option prior to November 15, 2008. Thereafter, the Company may redeem
all or a part of the Notes from time to time, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date, if redeemed
during the twelve-month period beginning on November 15 of the years indicated
below:

                                       44



Year                                                                 Percentage
- ----                                                                 ----------
2008..............................................................    104.000%
2009..............................................................    102.667%
2010..............................................................    101.334%
2011 and thereafter...............................................    100.000%

          (b) At any time prior to November 15, 2006, the Company may on any one
or more occasions redeem up to 40% of the initial aggregate principal amount of
the Notes at a redemption price of 108.00% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date, with the net cash proceeds of one or more Equity Offerings of the Company
(or of the Parent to the extent such proceeds are contributed to the common
equity of the Company); provided that (A) at least 60% of the aggregate
principal amount of the Initial Notes issued remains outstanding immediately
after the occurrence of such redemption, excluding Notes held by the Company and
its Subsidiaries; and (B) the redemption must occur within 90 days of the date
of the closing of such Equity Offering.

          (c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.

          SECTION 3.08. Mandatory Redemption. Except as set forth in Section
4.10 and 4.14 hereof, the Company is not required to make mandatory redemption
or sinking fund payments with respect to the Notes.

          SECTION 3.09. Offer to Purchase. In the event that, pursuant to
Section 4.10 or 4.14 hereof, the Company shall be required to commence an offer
to all Holders to purchase Notes (a "Repurchase Offer"), it shall follow the
procedures specified below.

          The Repurchase Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date") the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 or 4.14 hereof (the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Notes tendered in response to
the Repurchase Offer. Payment for any Notes so purchased shall be made in the
same manner as interest payments are made.

          If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Repurchase Offer.

          Upon the commencement of a Repurchase Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall state:

                                       45



          (a) that the Repurchase Offer is being made pursuant to this Section
     3.09 and Sections 4.10 or 4.14 hereof and the length of time the Repurchase
     Offer shall remain open;

          (b) the Offer Amount, the purchase price and the Purchase Date;

          (c) that any Note not tendered or accepted for payment shall continue
     to accrete or accrue interest;

          (d) that, unless the Company defaults in making such payment, any Note
     accepted for payment pursuant to the Repurchase Offer shall cease to
     accrete or accrue interest after the Purchase Date;

          (e) that Holders electing to have a Note purchased pursuant to a
     Repurchase Offer may only elect to have all of such Note purchased or a
     portion of such Note in denominations of $1,000 or integral multiples
     thereof;

          (f) that Holders electing to have a Note purchased pursuant to any
     Repurchase Offer shall be required to surrender the Note, with the form
     entitled "Option of Holder to Elect Purchase" on the reverse of the Note
     completed, or transfer by book-entry transfer, to the Company, the
     Depositary, if appointed by the Company, or a Paying Agent at the address
     specified in the notice at least three days before the Purchase Date;

          (g) that Holders shall be entitled to withdraw their election if the
     Company, the Depositary or the Paying Agent, as the case may be, receives,
     not later than the expiration of the Offer Period, a telegram, telex,
     facsimile transmission or letter setting forth the name of the Holder, the
     principal amount of the Note the Holder delivered for purchase and a
     statement that such Holder is withdrawing his election to have such Note
     purchased;

          (h) that, if the aggregate principal amount of Notes surrendered by
     Holders exceeds the Offer Amount, the Company shall select the Notes to be
     purchased on a pro rata basis (with such adjustments as may be deemed
     appropriate by the Company so that only Notes in denominations of $1,000,
     or integral multiples thereof, shall be purchased); and

          (i) that Holders whose Notes were purchased only in part shall be
     issued new Notes equal in principal amount to the unpurchased portion of
     the Notes surrendered (or transferred by book-entry transfer).

          On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Repurchase
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by

                                       46



such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new Note to such Holder, in
a principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the
Repurchase Offer on the Purchase Date.

          Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof, except that a Change of Control Offer may be
conditional under the circumstances set forth in Section 4.14(c) hereof.

                                    ARTICLE 4

                                    COVENANTS

          SECTION 4.01. Payment of Notes. The Company shall pay or cause to be
paid the principal of, premium, if any, and interest on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if a
Person other than the Company or a Subsidiary thereof, holds as of 12:00 p.m.
(noon) Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

          The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.

          SECTION 4.02. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee, Registrar
or co-registrar) where Notes may be surrendered for registration of transfer or
for exchange and where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.

          The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or

                                       47



agency in the Borough of Manhattan, The City of New York for such purposes. The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

          The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.

          SECTION 4.03. Reports. (a) Whether or not required by the SEC, so long
as any Notes are outstanding (unless defeased in a legal defeasance), the
Company will furnish to the Trustee on behalf of the Holders of Notes, within
the time periods specified in the SEC's rules and regulations (including any
extensions permitted thereunder), (i) all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on the
annual financial statements by the Company's certified independent accountants;
and (ii) all current reports that would be required to be filed with the SEC on
Form 8-K if the Company were required to file such reports. In addition,
following the date by which the Company is required to consummate the Exchange
Offer, whether or not required by the SEC, the Company will file a copy of all
of the information and reports referred to in clauses (i) and (ii) above with
the SEC for public availability within the time periods specified in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. In addition, the Company and the Guarantors have agreed that, for so
long as any Notes (but not the Exchange Notes) remain outstanding, they will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act if not obtainable from the SEC.

          (b) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries (other than Subsidiaries that individually or as a
group constitute an Immaterial Subsidiary), then the quarterly and annual
financial information required by paragraph (a) above shall include a reasonably
detailed presentation, either on the face of the financial statements or in the
footnotes thereto, and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," of the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company.

          SECTION 4.04. Compliance Certificate. (a) The Company and each
Guarantor (to the extent that such Guarantor is so required under the TIA) shall
deliver to the Trustee, within 120 days after the end of each fiscal year, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have

                                       48



knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.

          (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

          (c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith, but in no event later than three Business
Days, upon any Officer becoming aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.

          SECTION 4.05. Taxes. The Company shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

          SECTION 4.06. Stay, Extension and Usury Laws. The Company and each of
the Guarantors covenant (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company and each of the Guarantors (to
the extent that it may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenant that it shall not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.

          SECTION 4.07. Restricted Payments. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly:

          (1) declare or pay any dividend or make any other payment or
     distribution on account of the Company's or any of its Restricted
     Subsidiaries' Equity Interests (including, without limitation, any payment
     in connection with any merger or consolidation involving the Company or any
     of its Restricted Subsidiaries), other than dividends or distributions
     payable in Equity Interests (other than Disqualified Stock) of the Company
     or to the Company or a Restricted Subsidiary of the Company;

                                       49



          (2) purchase, redeem or otherwise acquire or retire for value
     (including, without limitation, in connection with any merger or
     consolidation involving the Company) any Equity Interests of the Company or
     the Parent;

          (3) make any payment of principal or premium on or with respect to, or
     purchase, redeem, defease or otherwise acquire or retire for value, any
     Indebtedness that is subordinated to the Notes or the Note Guarantees,
     except a payment of principal at the Stated Maturity thereof; or

          (4) make any Restricted Investment (all such payments and other
     actions set forth in clauses (1) through (4) above being collectively
     referred to as "Restricted Payments"),

unless, at the time of and after giving effect to such Restricted Payment:

          (i) no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof; and

          (ii) the Company would, at the time of such Restricted Payment and
     after giving pro forma effect thereto as if such Restricted Payment had
     been made at the beginning of the applicable four-quarter period, have been
     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Fixed Charge Coverage Ratio test set forth in the first paragraph of
     Section 4.09; and

          (iii) such Restricted Payment, together with the aggregate amount of
     all other Restricted Payments made by the Company and its Restricted
     Subsidiaries after the date hereof (excluding Restricted Payments permitted
     by clauses (ii), (iii), (vi), (vii), (viii), (x) and (xi) of the next
     succeeding paragraph), is less than the sum, without duplication, of:

               (A) 50% of the Consolidated Net Income of the Company for the
          period (taken as one accounting period) beginning on the date hereof
          and ending on the date of the Company's most recently ended fiscal
          quarter for which internal financial statements are available at the
          time of such Restricted Payment (or, if such Consolidated Net Income
          for such period is a deficit, less 100% of such deficit), plus

               (B) 100% of the aggregate net proceeds (including the fair market
          value of property) received by the Company subsequent to the date
          hereof as a contribution to its common equity capital or from the
          issue or sale of Equity Interests of the Company (other than Excluded
          Contributions or net proceeds from the issue and sale of Disqualified
          Stock) or from the issue or sale of convertible or exchangeable
          Disqualified Stock or convertible or exchangeable debt securities of
          the Company that have been converted into or exchanged for such Equity
          Interests (other than Equity Interests (or Disqualified Stock or debt
          securities) sold to a Restricted Subsidiary of the Company); plus

               (C) an amount equal to the net reduction in Investments by the
          Company and its Restricted Subsidiaries, subsequent to the date
          hereof, resulting

                                       50



          from payments of interest on Indebtedness, dividends, repayments of
          loans or advances or other transfers of assets, in each case to the
          Company or any such Restricted Subsidiary from any such Investment, or
          from the net cash proceeds from the sale of any such Investment, or
          from a redesignation of an Unrestricted Subsidiary to a Restricted
          Subsidiary, but only if and to the extent such amounts are not
          included in the calculation of Consolidated Net Income and not to
          exceed in the case of any Investment the amount of the Investment
          previously made by the Company or any Restricted Subsidiary in such
          Person or Unrestricted Subsidiary; provided, that any amounts in
          excess of the amount of the Investment may be added to the amounts
          otherwise available under this clause (C) to make Restricted
          Investments pursuant to this clause (C).

          The preceding provisions will not prohibit:

               (i) the payment of any dividend within 60 days after the date of
          declaration thereof, if at said date of declaration such payment would
          have complied with the provisions of the Indenture;

               (ii) the redemption, repurchase, retirement, defeasance or other
          acquisition of any subordinated Indebtedness of the Company or any
          Restricted Subsidiary or of any Equity Interests of the Company or any
          Parent in exchange for, or out of the net cash proceeds of the
          substantially concurrent sale (other than to a Restricted Subsidiary
          of the Company) of, Equity Interests of the Company other than
          Disqualified Stock; provided that the amount of any such net proceeds
          that are utilized for any such redemption, repurchase, retirement,
          defeasance or other acquisition shall be excluded from clause (iii)(B)
          of the preceding paragraph;

               (iii) the repayment, defeasance, redemption, repurchase or other
          acquisition of subordinated Indebtedness of the Company or any
          Restricted Subsidiary with the net cash proceeds from an incurrence of
          Permitted Refinancing Indebtedness;

               (iv) the payment of any dividend by a Restricted Subsidiary of
          the Company to the holders of any series or class of its common Equity
          Interests on a pro rata basis;

               (v) the repurchase, redemption or other acquisition or retirement
          for value of any Equity Interests of the Company and any distribution,
          loan or advance to the Parent for the repurchase, redemption or other
          acquisition or retirement for value of any Equity Interests, of the
          Parent, in each case held by any former or current employees,
          officers, directors or consultants of the Company or any of its
          Restricted Subsidiaries or their respective estates, spouses, former
          spouses or family members under any management equity plan or stock
          option or other management or employee benefit plan upon the death,
          disability or termination of employment of such Persons, in an amount
          not to exceed $3.0 million in any calendar year; provided that the
          Company may carry over and make in subsequent calendar years, in
          addition to the amounts permitted for such calendar year, the amount
          of such purchases, redemptions or other acquisitions or retirements
          for value permitted to have been made but not made in any preceding
          calendar year up to a maximum of $9.0 million in any calendar year;
          and provided further

                                       51



          that such amount in any calendar year may be increased by an amount
          not to exceed (x) the net cash proceeds from the sale of Equity
          Interests (other than Disqualified Stock) of the Company (or the
          Parent to the extent such net cash proceeds are contributed to the
          common equity of the Company) to employees, officers, directors or
          consultants of the Company and its Restricted Subsidiaries that occurs
          after the date hereof (to the extent the cash proceeds from the sale
          of such Equity Interests have not otherwise been applied to the
          payment of Restricted Payments pursuant to clause (ii) above or
          previously applied to the payment of Restricted Payments pursuant to
          this clause (v)) plus (y) the cash proceeds of key man life insurance
          policies received by the Company and its Restricted Subsidiaries after
          the date hereof less any amounts previously applied to the payment of
          Restricted Payments pursuant to this clause (v); provided further that
          cancellation of Indebtedness owing to the Company from employees,
          officers, directors and consultants of the Company or any of its
          Restricted Subsidiaries in connection with a repurchase of Equity
          Interests of the Company from such Persons will not be deemed to
          constitute a Restricted Payment for purposes of this covenant or any
          other provisions of the Indenture; provided further that the net cash
          proceeds from such sales of Equity Interests described in clause (x)
          of this clause (v) shall be excluded from clause (iii)(B) of the
          preceding paragraph to the extent such proceeds have been or are
          applied to the payment of Restricted Payments pursuant to this clause
          (v);

               (vi) the payment of dividends or other distributions or the
          making of loans or advances to the Parent in amounts required for the
          Parent to pay franchise taxes and other fees required to maintain its
          existence and provide for all other operating costs of the Parent to
          the extent attributable to the ownership or operation of the Company
          and its Restricted Subsidiaries, including, without limitation, in
          respect of director fees and expenses, administrative, legal and
          accounting services provided by third parties and other costs and
          expenses including all costs and expenses with respect to filings with
          the SEC, of up to an aggregate under this clause (vi) of $500,000 per
          fiscal year plus any indemnification claims made by directors or
          officers of the Parent attributable to the ownership or operation of
          the Company and its Restricted Subsidiaries;

               (vii) the payment of dividends or other distributions by the
          Company to the Parent in amounts required to pay the tax obligations
          of the Parent attributable to the Company and its Subsidiaries
          determined as if the Company and its Subsidiaries had filed a separate
          consolidated, combined or unitary return for the relevant taxing
          jurisdiction; provided that any refunds received by the Parent
          attributable to the Company or any of its Subsidiaries shall promptly
          be returned by the Parent to the Company through a contribution to the
          common equity of, or the purchase of common stock (other than
          Disqualified Stock) of the Company from, the Company; and provided
          further that the amount of any such contribution or purchase shall be
          excluded from clause (3)(b) of the preceding paragraph;

               (viii) repurchases of Capital Stock deemed to occur upon the
          cashless exercise of stock options and warrants;

               (ix) other Restricted Payments not otherwise permitted by this
          Section 4.07 in an aggregate amount not to exceed $30.0 million;

                                       52



               (x) Restricted Payments to holders of equity interests of M-Foods
          Holdings Inc. contemplated by the Merger Agreement, including in
          connection with any post-closing purchase price adjustments pursuant
          to the Merger Agreement;

               (xi) the declaration and payment of dividends and distributions
          to holders of any class or series of Disqualified Stock of the Company
          or any of its Restricted Subsidiaries issued or incurred in accordance
          with Section 4.09;

               (xii) Investments that are made with Excluded Contributions;

               (xiii) following the first Public Equity Offering of the Company
          or the Parent of the Company after the date of the Indenture, the
          payment of dividends on the Company's common stock (and, in the case
          of a Public Equity Offering of the Parent, solely for the purpose of
          paying dividends on the Parent of the Company's common stock) in an
          amount not to exceed 6% per annum of the gross proceeds of such Public
          Equity Offering received by, and in the case of a Public Equity
          Offering of the Parent of the Company contributed to the common equity
          capital of, the Company (other than any such gross proceeds
          constituting Excluded Contributions);

               (xiv) upon the occurrence of a Change of Control and within 60
          days after completion of the offer to repurchase Notes pursuant to
          Section 4.14 hereof (including the purchase of all Notes tendered),
          any purchase or redemption of Indebtedness of the Company subordinated
          to the Notes that is required to be repurchased or redeemed pursuant
          to the terms thereof as a result of such Change of Control, at a
          purchase price not greater than 101% of the outstanding principal
          amount thereof (plus accrued and unpaid interest);

               (xv) dividends paid after September 30, 2004 in an amount equal
          to any reduction in taxes actually realized by the Company and its
          Restricted Subsidiaries in the form of cash refunds or from deductions
          when applied to offset income or gain as a direct result of (I) the
          tender costs, including the costs of any premium paid or interest
          expense, incurred in connection with repurchasing the 11 3/4% Senior
          Subordinated Notes due 2011 of Michael Foods, Inc., prior to the
          Mergers, (II) swap termination costs incurred in connection with
          terminating interest rate swap arrangements in respect to Indebtedness
          being refinanced as contemplated in the Offering Memorandum, (III)
          compensation expense incurred in connection with the repurchase or
          rollover of stock options or transaction bonuses, or (IV) the write
          off of deferred financing charges as a result of the refinancing
          contemplated in the Offering Memorandum, in the case of each of
          clauses (I) through (IV) in connection with the Mergers; provided,
          that the aggregate amount of dividends pursuant to this clause (xv)
          shall not exceed $30.0 million;

provided, however, that in the case of clauses (ii), (iii), (iv), (v), (vi),
(ix), (xi), (xiii), (xiv) and (xv) above, no Default or Event of Default has
occurred and is continuing.

          The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Subsidiary, as the case may be, pursuant to

                                       53



the Restricted Payment. The fair market value of any assets or securities that
are required to be valued for the purposes hereof shall, if the fair market
value thereof exceeds $2.0 million, be determined by the Board of Directors
whose resolution with respect thereto shall be delivered to the Trustee. The
Board of Directors' determination must be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if the fair market value exceeds $15.0 million. Not later than the date
of making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.07 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.

          SECTION 4.08. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

          (i) pay dividends or make any other distributions on its Capital Stock
     to the Company or any of its Restricted Subsidiaries, or with respect to
     any other interest or participation in, or measured by, its profits, or pay
     any indebtedness owed to the Company or any of its Restricted Subsidiaries;

          (ii) make loans or advances to the Company or any of its Restricted
     Subsidiaries; or

          (iii) transfer any of its properties or assets to the Company or any
     of its Restricted Subsidiaries.

          However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:

          (i) Existing Indebtedness, the Credit Agreement and the Senior
     Unsecured Term Loan Agreement as in effect on the date hereof and any
     amendments, modifications, restatements, renewals, increases, supplements,
     refundings, replacements or refinancings thereof; provided that such
     amendments, modifications, restatements, renewals, increases, supplements,
     refundings, replacements or refinancings are no more restrictive, taken as
     a whole, with respect to such encumbrances than those contained in such
     Existing Indebtedness, the Credit Agreement and the Senior Unsecured Term
     Loan Agreement, as in effect on the date hereof;

          (ii) this Indenture, the Notes and the Note Guarantees or by other
     Indebtedness of the Company which is pari passu in right of payment with
     the Notes or Note Guarantees, as applicable, incurred under an indenture
     pursuant to Section 4.09 hereof; provided that the encumbrances and
     restrictions are no more restrictive, taken as a whole, other than those
     contained herein;

          (iii) applicable law or regulation;

                                       54



          (iv) any agreements or instrument governing Indebtedness or Capital
     Stock of a Person acquired by the Company or any of its Restricted
     Subsidiaries as in effect at the time of such acquisition (except to the
     extent such Indebtedness was incurred in connection with or in
     contemplation of such acquisition), which encumbrance or restriction is not
     applicable to any Person, or the properties or assets of any Person, other
     than the Person, or the property or assets of the Person, so acquired;
     provided that, in the case of Indebtedness, such Indebtedness was permitted
     by the terms of this Indenture to be incurred;

          (v) customary non-assignment provisions in leases entered into in the
     ordinary course of business;

          (vi) purchase money obligations for property acquired in the ordinary
     course of business that impose restrictions on the property so acquired of
     the nature described in clause (iii) of the preceding paragraph;

          (vii) an agreement entered into for the sale or disposition of Capital
     Stock or assets of a Restricted Subsidiary or an agreement entered into for
     the sale of specified assets (in either case, so long as such encumbrance
     or restriction, by its terms, terminates on the earlier of the termination
     of such agreement or the consummation of such agreement and so long as such
     restriction applies only to the Capital Stock or assets to be sold);

          (viii) Permitted Refinancing Indebtedness, provided that the
     encumbrances and restrictions contained in the agreements governing such
     Permitted Refinancing Indebtedness are no more restrictive, taken as a
     whole, than those contained in the agreements governing the Indebtedness
     being refinanced;

          (ix) Permitted Liens securing Indebtedness that limit the right of the
     debtor to dispose of the assets subject to such Lien;

          (x) customary limitations on the disposition or distribution of assets
     or property in joint venture agreements and other similar agreements
     entered into in the ordinary course of business;

          (xi) any Purchase Money Note, or other Indebtedness or contractual
     requirements of a Receivables Subsidiary in connection with a Qualified
     Securitization Transaction; provided that such restrictions only apply only
     to such Receivables Subsidiary; and

          (xii) cash or other deposits or net worth imposed by customers or
     agreements entered into in the ordinary course of business.

          SECTION 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company will not issue any Disqualified Stock and the

                                       55



Company will not permit any of its Restricted Subsidiaries to issue any
Disqualified Stock or preferred stock; provided, however, that the Company and
the Guarantors may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock and the Guarantors may issue preferred stock, if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.00 to
1, determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or
Disqualified Stock or preferred stock had been issued, as the case may be, at
the beginning of such four-quarter period.

          The first paragraph of this Section 4.09 will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

          (i) the incurrence by the Company or any Guarantor of Indebtedness
     under the Credit Facilities (and the incurrence by the Guarantors of
     guarantees thereof) in an aggregate principal amount at any one time
     outstanding (with letters of credit being deemed to have a principal amount
     equal to the maximum potential liability of the Company and the Guarantors
     thereunder) not to exceed $730.0 million and (b) the incurrence by the
     Company or any Guarantor of additional Indebtedness under Credit Facilities
     (and the incurrence by the Guarantors of guarantees thereof) in an
     aggregate principal amount at any one time outstanding (with letters of
     credit being deemed to have a principal amount equal to the maximum
     potential liability of the Company and the Guarantors thereunder) not to
     exceed the amount, if any, by which (x) the amount of the Borrowing Base as
     of the date of such incurrence exceeds (y) the aggregate amount of
     Indebtedness permitted to be incurred pursuant to the immediately preceding
     clause (a) as of the date of such incurrence, less, in the case of each of
     clause (a) and (b) the aggregate amount of all Net Proceeds of Asset Sales
     applied by the Company or any Guarantor to repay any Indebtedness under
     Credit Facilities (and, in the case of any revolving credit Indebtedness
     under a Credit Facility, to effect a corresponding commitment reduction
     thereunder) pursuant to Section 4.10;

          (ii) the incurrence by the Company or any Guarantor of the Existing
     Indebtedness;

          (iii) the incurrence by the Company and its Restricted Subsidiaries of
     Indebtedness represented by the Notes to be issued on the Issue Date and
     the related Note Guarantees and the Exchange Notes and the related Note
     Guarantees to be issued pursuant to the Registration Rights Agreement;

          (iv) the incurrence by the Company or any of its Restricted
     Subsidiaries of Indebtedness represented by Capital Lease Obligations,
     mortgage financings or purchase money obligations, in each case, incurred
     for the purpose of financing all or any part of the purchase price, or cost
     of construction or improvement, of property (real or personal), plant or
     equipment used in the business of the Company or any of its Restricted
     Subsidiaries (whether through the direct acquisition of such assets or the
     acquisition of Equity Interests of any Person owning such assets) in an
     aggregate principal amount,

                                       56



     including all Permitted Refinancing Indebtedness incurred to refund,
     refinance or replace any Indebtedness incurred pursuant to this clause
     (iv), not to exceed, at any time outstanding, the greater of (x) $20.0
     million and (y) 5% of Total Tangible Assets;

          (v) the incurrence by the Company or any of its Restricted
     Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
     net proceeds of which are used to refund, refinance or replace Indebtedness
     (other than intercompany Indebtedness) that was permitted to be incurred
     under the first paragraph of this Section 4.09 or clauses (ii), (iii),
     (iv), (v), or (xv), of this Section 4.09;

          (vi) the incurrence by the Company or any of its Restricted
     Subsidiaries of intercompany Indebtedness between or among the Company and
     any of its Restricted Subsidiaries; provided, however, that:

               (a) if the Company or any Guarantor is the obligor on such
          Indebtedness, such Indebtedness must be expressly subordinated to the
          prior payment in full in cash of all Obligations with respect to the
          Notes, in the case of the Company, or the Note Guarantee, in the case
          of a Guarantor; and

               (b) (1) any subsequent issuance or transfer of Equity Interests
          that results in any such Indebtedness being held by a Person other
          than the Company or a Restricted Subsidiary thereof and (2) any sale
          or other transfer of any such Indebtedness to a Person that is not
          either the Company or a Restricted Subsidiary thereof; shall be
          deemed, in each case, to constitute an incurrence of such Indebtedness
          by the Company or such Restricted Subsidiary, as the case may be, that
          was not permitted by this clause (vi);

          (vii) the incurrence by the Company or any of its Restricted
     Subsidiaries of Hedging Obligations that are incurred in the ordinary
     course of business for the purpose of fixing, hedging or swapping interest
     rate, commodity price or foreign currency exchange rate risk (or to reverse
     or amend any such agreements previously made for such purposes), and not
     for speculative purposes, and that do not increase the Indebtedness of the
     obligor outstanding at any time other than as a result of fluctuations in
     interest rates, commodity prices or foreign currency exchange rates or by
     reason of fees, indemnities and compensation payable thereunder;

          (viii) the guarantee by the Company or any Restricted Subsidiary of
     Indebtedness of the Company or a Restricted Subsidiary of the Company that
     was permitted to be incurred by this Section 4.09; provided that, in the
     case of a guarantee of any Restricted Subsidiary that is not a Guarantor,
     such Restricted Subsidiary complies with Section 4.17 hereof;

          (ix) the accrual of interest, the accretion or amortization of
     original issue discount, the payment of interest on any Indebtedness in the
     form of additional Indebtedness with the same terms, and the payment of
     dividends on Disqualified Stock or preferred stock in the form of
     additional shares of the same class of Disqualified Stock or preferred
     stock will not be deemed to be an incurrence of Indebtedness or an issuance
     of

                                       57



     Disqualified Stock or preferred stock for purposes of this Section 4.09;
     provided, in each such case, that the amount thereof is included in Fixed
     Charges of the Company as accrued;

          (x) the incurrence by the Company's Unrestricted Subsidiaries of
     Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
     to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
     deemed to constitute an incurrence of Indebtedness by a Restricted
     Subsidiary of the Company that was not permitted by this clause (x);

          (xi) the incurrence by the Company or any of its Restricted
     Subsidiaries of Indebtedness constituting reimbursement obligations with
     respect to letters of credit issued in the ordinary course of business,
     including, without limitation, letters of credit in respect of workers'
     compensation claims or self-insurance, or other Indebtedness with respect
     to reimbursement type obligations regarding workers' compensation claims or
     self-insurance; provided, however, that, upon the drawing of such letters
     of credit or the incurrence of such Indebtedness, such obligations are
     reimbursed within 30 days following such drawing or incurrence;

          (xii) the incurrence by the Company or any of its Restricted
     Subsidiaries of Indebtedness arising from agreements of the Company or such
     Restricted Subsidiary providing for indemnification, adjustment of purchase
     price or similar obligations, in each case, incurred or assumed in
     connection with the disposition of any business, assets or Capital Stock of
     the Company or a Restricted Subsidiary, other than guarantees of
     Indebtedness incurred by any Person acquiring all or any portion of such
     business, assets or a Subsidiary for the purpose of financing such
     acquisition; provided that:

               (a) that Indebtedness is not reflected on the balance sheet of
          the Company or any Restricted Subsidiary (contingent obligations
          referred to in a footnote or footnotes to financial statements and not
          otherwise reflected on the balance sheet will not be deemed to be
          reflected on that balance sheet for purposes of this clause (a)); and

               (b) the maximum assumable liability in respect of that
          Indebtedness shall at no time exceed the gross proceeds including
          non-cash proceeds (the fair market value of those non-cash proceeds
          being measured at the time received and without giving effect to any
          subsequent changes in value) actually received by the Company and/or
          that Restricted Subsidiary in connection with that disposition;

          (xiii) the issuance of Disqualified Stock or preferred stock by any of
     the Company's Restricted Subsidiaries issued to the Company or another
     Restricted Subsidiary; provided that (i) any subsequent issuance or
     transfer of any Equity Securities that results in such Restricted
     Subsidiary, such Disqualified Stock or preferred stock being held by a
     person other than the Company or a Restricted Subsidiary thereof and (ii)
     any sale or other transfer of any such shares of Disqualified Stock or
     preferred stock to a Person that is not either the Company or another
     Restricted Subsidiary thereof shall be

                                       58



     deemed, in each case, to constitute an issuance of such shares of
     Disqualified Stock or preferred stock that was not permitted by this clause
     (xiii);

          (xiv) the incurrence by the Company or any of its Restricted
     Subsidiaries of obligations in respect of performance and surety bonds and
     completion guarantees provided by the Company or such Restricted Subsidiary
     in the ordinary course of business;

          (xv) the incurrence by the Company or any Guarantor of Indebtedness in
     an aggregate principal amount (or accreted value, as applicable) at any
     time outstanding, including all Permitted Refinancing Indebtedness incurred
     to refund, refinance or replace any Indebtedness incurred pursuant to this
     clause (xv), not to exceed $30 million;

          (xvi) the incurrence by the Foreign Restricted Subsidiaries of the
     Company of Indebtedness in an aggregate principal amount at any one time
     outstanding (with letters of credit being deemed to have a principal amount
     equal to the maximum potential liability of the Restricted Subsidiaries
     under any credit facility entered into in connection therewith) not to
     exceed the greater of (x) $20 million or (y) the amount of the Foreign
     Borrowing Base as of the date of such incurrence;

          (xvii) the incurrence of any Indebtedness by a Receivables Subsidiary
     that is not recourse to the Company or any other Restricted Subsidiary of
     the Company (other than Standard Securitization Undertakings) incurred in
     connection with a Qualified Receivables Transaction; and

          (xviii) contingent liabilities arising out of endorsements of checks
     and other negotiable instruments for deposit or collection in the ordinary
     course of business.

          For purposes of determining compliance with this Section 4.09, in the
event that any proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xviii) above, or
is entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company will be permitted to classify such item of Indebtedness on the date
of its incurrence, and from time to time may reclassify, in any manner that
complies with this Section 4.09 at such time. Indebtedness under the Credit
Agreement and Senior Unsecured Term Loan Agreement on the date hereof shall be
deemed to have been incurred on the date hereof in reliance on the exception
provided by clause (i) of the definition of Permitted Debt.

          SECTION 4.10. Asset Sales. The Company will not, and will not permit
any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed of;
(ii) such fair market value is determined by the Company's Board of Directors
and evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee; and (iii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of Cash, Cash Equivalents or Replacement Assets or a

                                       59



combination thereof. For purposes of this provision, each of the following shall
be deemed to be cash:

          (a) any liabilities (as shown on the Company's or such Restricted
     Subsidiary's most recent balance sheet), of the Company or any Restricted
     Subsidiary (other than contingent liabilities and liabilities that are by
     their terms subordinated to the Notes or any Note Guarantee) that are
     assumed by the transferee of any such assets and, in the case of
     liabilities other than Non-Recourse Debt, where the Company and all
     Restricted Subsidiaries are released from any further liability in
     connection therewith; and

          (b) any securities, notes or other obligations received by the Company
     or any such Restricted Subsidiary from such transferee that are within 180
     days of receipt thereof converted by the Company or such Restricted
     Subsidiary into cash (to the extent of the cash received in that
     conversion).

          For purposes of clause (iii) above, any liabilities of the Company or
any Restricted Subsidiary that are not assumed by the transferee of such assets
in respect of which the Company and all Restricted Subsidiaries are not released
from any future liabilities in connection therewith shall not be considered
consideration.

          Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds at its option:

          (1) to repay Senior Debt and, if the Senior Debt repaid is revolving
     credit Indebtedness, to correspondingly reduce commitments with respect
     thereto;

          (2) to acquire all or substantially all of the assets of, or a
     majority of the Voting Stock of, another Permitted Business;

          (3) to acquire other assets, including investments in property, or to
     make capital expenditures, that, in either case, are used or useful in a
     Permitted Business; or

          (4) any combination of the foregoing.

          Pending the final application of any such Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited hereunder.

          Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will make
an Asset Sale Offer to all Holders of Notes and Additional Notes, if any, and
all holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth herein with respect to offers to purchase
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and Additional Notes, if any, and such other pari passu Indebtedness that
maybe purchased out of the Excess Proceeds. The offer price in any Asset Sale
Offer will be equal to 100% of principal amount plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after

                                       60



consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such
other pari passu Indebtedness to be purchased shall be purchased on a pro rata
basis based on the principal amount of Notes and Additional Notes and such other
pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.

          The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.

          SECTION 4.11. Transactions with Affiliates. The Company will not, and
will not permit any of its Restricted Subsidiaries to, make any payment to, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate on or after the date hereof (each, an
"Affiliate Transaction"), unless: (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person; and (ii) the
Company delivers to the Trustee: (a) with respect to any Affiliate Transaction
or series of related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
this Section 4.11 and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors; and (b) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $15.0 million, an opinion as to
the fairness to the Company or such Restricted Subsidiary of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing. No outside director or
non-management director shall be deemed not to be a "disinterested director" by
reason of his receipt of reasonable and customary directors' fees or the
participation in reasonable and customary directors' stock grant, stock option
or stock warrant plans, or such other form of director remuneration as is
reasonable and customary.

          The following items shall not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:

          (1) any consulting or employment agreement or arrangement entered into
     by the Company or any of its Restricted Subsidiaries approved by a majority
     of the disinterested members of the Board of Directors of the Company;

          (2) transactions between or among the Company and/or its Restricted
     Subsidiaries;

                                       61



          (3) payment of reasonable directors fees to directors of the Company
     and the Parent and the provision of customary indemnification to directors
     and officers of the Company and the Parent;

          (4) sales of Equity Interests (other than Disqualified Stock) to
     Affiliates of the Company;

          (5) any tax sharing agreement or arrangement and payments pursuant
     thereto among the Company and its Subsidiaries and any other Person with
     which the Company or its Subsidiaries is required or permitted to file a
     consolidated, combined or unitary tax return or with which the Company or
     any of its Restricted Subsidiaries is or could be part of a consolidated,
     combined or unitary group for tax purposes in amounts not otherwise
     prohibited by this Indenture;

          (6) Restricted Payments that are permitted by the provisions of
     Section 4.07 or any Permitted Investment;

          (7) the payment (directly or through the Parent) of annual management,
     consulting, monitoring and advising fees and related expenses to the Equity
     Sponsor and its Affiliates pursuant to a management agreement entered into
     in connection with the Mergers pursuant to the Merger Agreement and as
     described under the caption "Certain Relationships and Related Transactions
     - Management Agreement" in the Offering Memorandum;

          (8) payments by the Company or any of its Restricted Subsidiaries to
     the Equity Sponsor and its Affiliates for any financial advisory,
     financing, underwriting or placement services or in respect of other
     investment banking activities, including, without limitation, in connection
     with acquisitions or divestitures, which payments are approved by the
     majority of the Board of Directors of the Company in good faith and are in
     an amount not to exceed the greater of (i) $1.0 million or (ii) 1.25% of
     the aggregate transaction value (including enterprise value in connection
     with acquisitions or divestitures) (or portion thereof) in respect of which
     such services are rendered;

          (9) loans to employees of the Company that are approved in good faith
     by a majority of the Board of Directors of the Company in an amount not to
     exceed $3.0 million outstanding at any time and advances and expense
     reimbursements to employees in the ordinary course of business;

          (10) agreements (and payments relating thereto) pursuant to the Merger
     Agreement and as otherwise described in the Offering Memorandum, as the
     same may be amended, modified or replaced from time to time, so long as any
     amendment, modification or replacement is not materially less favorable to
     the Company and its Restricted Subsidiaries than the agreements described
     in the Offering Memorandum and in effect on the date hereof,

          (11) transactions with a joint venture engaged in a Permitted
     Business; provided that all the outstanding ownership interests of such
     joint venture are owned only

                                       62



     by the Company, its Restricted Subsidiaries and Persons who are not
     Affiliates of the Company; and

          (12) transactions between a Receivables Subsidiary and any Person in
     which the Receivables Subsidiary has an Investment.

          SECTION 4.12. Liens. The Company will not, and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing Indebtedness
(other than Permitted Liens) upon any of their property or assets, now owned or
hereafter acquired, unless all payments due under this Indenture and the Notes
are secured on an equal and ratable basis with the obligations so secured (or,
in the case of subordinated Indebtedness, prior or senior thereto, with the same
relative priority as the Notes shall have with respect to such subordinated
Indebtedness) until such time as such obligations are no longer secured by a
Lien.

          SECTION 4.13. Corporate Existence. Subject to Article 5 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.

          SECTION 4.14. Offer to Repurchase upon Change of Control. (a) Upon the
occurrence of a Change of Control, each Holder of Notes shall have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and stating (1) that the
Change of Control Offer is being made pursuant to this Section 4.14 and that all
Notes tendered will be accepted for payment; (2) the purchase price and the
purchase date, which shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"); (3)
that any Note not tendered will continue to accrue interest; (4) that, unless
the Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the

                                       63



close of business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes delivered for purchase,
and a statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture relating to such
Change of Control Offer, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.

          (b) By 12:00 p.m. (noon) Eastern Time on the Change of Control Payment
Date, the Company shall, to the extent lawful, (1) accept for payment all Notes
or portions thereof properly tendered pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered, and (3) deliver
or cause to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to each Holder of Notes so tendered the Change of Control Payment for such
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. Prior to compliance with this Section 4.14, but in any event within 90
days following a Change of Control, the Company will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this Section 4.14. The Company shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.

          (c) Notwithstanding anything to the contrary in this Section 4.14, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.14 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer. A
Change in Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive agreement is in place
for the Change of Control at the time of making of the Change of Control Offer.
Notes repurchased pursuant to a Change of Control Offer will be retired and
cancelled.

          SECTION 4.15. Limitation on Other Senior Subordinated Debt. The
Company shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is by its terms contractually subordinate or
junior in right of payment to any Senior Debt of the Company and senior in right
of payment to the Notes. No Guarantor will incur, create, issue,

                                       64



assume, guarantee or otherwise become liable for any Indebtedness that is
contractually subordinate or junior in right of payment to the Senior Debt of
such Guarantor and senior in right of payment to such Guarantor's Note
Guarantee.

          SECTION 4.16. [Reserved].

          SECTION 4.17. Limitation on Issuances of Guarantees of Indebtedness.
(a) The Company will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company or any other Restricted Subsidiary (other than a
Guarantee or pledge by a Foreign Restricted Subsidiary securing the payment of
Indebtedness of another Foreign Restricted Subsidiary) unless either (1) such
Restricted Subsidiary is a Guarantor or (2) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture providing for the
Guarantee of the payment of the Notes by such Restricted Subsidiary, which
Guarantee shall be senior to or pari passu with such Subsidiary's Guarantee of
or pledge to secure such other Indebtedness, unless such other Indebtedness is
Senior Debt, in which case the Guarantee of the Notes may be subordinated to the
Guarantee of such Senior Debt to the same extent as the Notes are subordinated
to such Senior Debt.

          (b) Notwithstanding clause (a) of this Section 4.17, any Note
Guarantee will provide by its terms that it will be automatically and
unconditionally released and discharged pursuant to Section 11.06.

          SECTION 4.18. Additional Guarantees. If the Company or any of its
Restricted Subsidiaries acquires or creates another Domestic Subsidiary (other
than a Receivables Subsidiary) on or after the date hereof, then the newly
acquired or created Domestic Subsidiary (other than an Immaterial Subsidiary)
must become a Guarantor and execute a supplemental indenture in the form of
Exhibit E hereto providing for the Guarantee of the payment of the Notes by such
Domestic Subsidiary on the same basis as the Guarantors on the date hereof and
deliver an Opinion of Counsel to the Trustee within 20 Business Days of the date
on which it was acquired or created.

          SECTION 4.19. Business Activities. The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business other than Permitted
Businesses.

          SECTION 4.20. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors of the Company may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if that designation would not cause a Default;
provided that in no event shall (i) there be any Unrestricted Subsidiaries on or
immediately following the date hereof and (ii) the business currently operated
by the Egg Products Division be transferred to or held by an Unrestricted
Subsidiary. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by the Company and its Restricted Subsidiaries in the Subsidiary so designated
(after giving effect to any sale of Equity Interests of such Subsidiary in
connection with such designation) will be deemed to be a Restricted Investment
made as of the time of such designation and will either reduce the amount
available for Restricted Payments pursuant to the first paragraph of Section
4.07 or reduce the amount available for future Permitted Investments under one
or more clauses of the definition of

                                       65



"Permitted Investments". That designation will only be permitted if such
Investment would be permitted at that time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (1) such Indebtedness is permitted under
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four quarter reference period; and (2) no
Default or Event of Default would be in existence following such designation.

                                    ARTICLE 5

                                   SUCCESSORS

          SECTION 5.01. Merger Consolidation, or Sale of Assets. The Company
will not, directly or indirectly, consolidate or merge with or into another
Person (whether or not the Company is the surviving corporation), and the
Company will not, and will not cause or permit any Restricted Subsidiary to,
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company and its Restricted Subsidiaries taken
as a whole, in one or more related transactions, to another Person (including by
way of consolidation or merger), unless:

          (1) either: (a) the Company or such Restricted Subsidiary, as the case
     may be, is the surviving corporation; or (b) the Person formed by or
     surviving any such consolidation or merger (if other than the Company or
     such Restricted Subsidiary) or to which such sale, assignment, transfer,
     conveyance or other disposition shall have been made is a corporation,
     partnership or limited liability company organized or existing under the
     laws of the United States, any state thereof or the District of Columbia;
     provided, that in the case such Person is a limited liability company or a
     partnership, a co-obligor of the Notes is a corporation;

          (2) the Person formed by or surviving any such consolidation or merger
     (if other than the Company or such Restricted Subsidiary) or the Person to
     which such sale, assignment, transfer, conveyance or other disposition
     shall have been made assumes all the obligations of the Company or such
     Restricted Subsidiary (if such Restricted Subsidiary is a Guarantor), as
     the case may be, under the Notes, the Indenture and the Registration Rights
     Agreement pursuant to agreements reasonably satisfactory to the Trustee;

          (3) immediately after such transaction and any related financing
     transactions, no Default or Event of Default exists; and

          (4) the Company or the Person formed by or surviving any such
     consolidation or merger (if other than the Company), or to which such sale,
     assignment, transfer, conveyance or other disposition shall have been made,
     will, on the date of such transaction after giving pro forma effect thereto
     and any related financing transactions as if the same had occurred at the
     beginning of the applicable four-quarter period be

                                       66



     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Fixed Charge Coverage Ratio test set forth in the first paragraph of
     Section 4.09, or if not, the Fixed Charge Coverage Ratio on such basis is
     higher than the Fixed Charge Coverage Ratio immediately prior to such
     transactions.

          In addition, neither the Company nor any Restricted Subsidiary may,
directly or indirectly, lease all or substantially all of its properties or
assets, in one or more related transactions, to any other Person. This Section
5.01 will not apply to (i) a sale, assignment, transfer, conveyance or other
disposition of assets between or among the Company and any of its Restricted
Subsidiaries or (ii) the Mergers on the terms set forth in the Merger Agreement
and as described in the Offering Memorandum.

          SECTION 5.02. Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, assignment, transfer, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, conveyance or other disposition is made shall succeed to,
and be substituted for (so that from and after the date of such consolidation,
merger, sale, conveyance or other disposition, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein; provided, however, that the predecessor Company shall not
be relieved from the obligation to pay the principal of and interest on the
Notes except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

          SECTION 6.01. Events of Default. Each of the following is an "Event of
Default":

          (a) default in the payment when due of interest on, or Liquidated
     Damages with respect to, the Notes (whether or not permitted by Article 10
     hereof) and such default continues for a period of 30 days;

          (b) default in payment when due of the principal of or premium, if
     any, on the Notes (whether or not permitted by Article 10 hereof);

          (c) failure by the Company to comply with the provisions of Sections
     4.10, 4.14 and 5.01 hereof;

          (d) failure by the Company or any of its Restricted Subsidiaries for
     45 days after notice from the Trustee or holders of at least 25% in
     principal amount of the Notes, including Additional Notes, if any, then
     outstanding, to comply with any of its other covenants or agreements in
     this Indenture;

                                       67



          (e) default by the Company or any Restricted Subsidiary under any
     mortgage, indenture or instrument under which there may be issued or by
     which there may be secured or evidenced any Indebtedness for money borrowed
     by the Company or any of its Restricted Subsidiaries (or the payment of
     which is guaranteed by the Company or any of its Restricted Subsidiaries)
     whether such Indebtedness or guarantee now exists, or is created after the
     date hereof, if that default (i) is caused by a failure to make any payment
     when due at final maturity any such Indebtedness of (a "Payment Default")
     or (ii) results in the acceleration of such Indebtedness prior to its
     express maturity, and, in each case, the principal amount of any such
     Indebtedness, together with the principal amount of any other such
     Indebtedness under which there has been a Payment Default or the maturity
     of which has been so accelerated, aggregates $15 million or more.

          (f) failure by the Company or any of its Restricted Subsidiaries to
     pay final judgments aggregating in excess of $15.0 million, which judgments
     are not paid, discharged or stayed for a period of 60 days after such
     judgments have become final and non appealable and in the event such
     judgment is covered by insurance, an enforcement proceeding has been
     commenced by any creditor upon such judgment or decree that is not promptly
     stayed;

          (g) except as permitted by this Indenture, any Note Guarantee of a
     Guarantor (other than an Immaterial Guarantor) shall be held in any
     judicial proceeding to be unenforceable or invalid or shall cease for any
     reason to be in full force and effect or any Guarantor (other than an
     Immaterial Guarantor), or any Person acting on behalf of any Guarantor
     (other than an Immaterial Guarantor), shall deny or disaffirm its
     obligations under its Note Guarantee;

          (h) any Guarantor, the Company or any of its Subsidiaries that is a
     Significant Subsidiary or any group of Restricted Subsidiaries that, taken
     as a whole, would constitute a Significant Subsidiary pursuant to or within
     the meaning of Bankruptcy Law:

               (1) commences a voluntary case; or

               (2) consents to entry of an order for relief against it in an
          involuntary case; or

               (3) consents to the appointment of a custodian of it or for all
          or substantially all of its property; or

               (4) makes a general assignment for the benefit of its creditors;
          or

               (5) generally is not paying its debts as they become due; or

          (i) a court of competent jurisdiction enters an order or decree under
     any Bankruptcy Law that:

               (1) is for relief against any Guarantor, the Company or any of
          its Subsidiaries that is a Significant Subsidiary or any group of
          Restricted

                                       68



          Subsidiaries that, taken as a whole, would constitute a Significant
          Subsidiary in an involuntary case;

               (2) appoints a custodian of any Guarantor, the Company or any of
          its Subsidiaries that is a Significant Subsidiary or any group of
          Restricted Subsidiaries that, taken as a whole, would constitute a
          Significant Subsidiary or for all or substantially all of the property
          of any Guarantor, the Company or any of its Subsidiaries that is a
          Significant Subsidiary or any group of Restricted Subsidiaries that,
          taken as a whole, would constitute a Significant Subsidiary; or

               (3) orders the liquidation of any Guarantor, the Company or any
          of its Subsidiaries that is a Significant Subsidiary or any group of
          Restricted Subsidiaries that, taken as a whole, would constitute a
          Significant Subsidiary;

     and the order or decree remains unstayed and in effect for 60 consecutive
     days; or

          In the event of a declaration of acceleration of the Notes because an
Event of Default has occurred and is continuing as a result of the acceleration
of any Indebtedness described in clause (e) of the preceding paragraph, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in clause (e) of the preceding paragraph
have rescinded the declaration of acceleration in respect of such Indebtedness
within 30 days of the date of such declaration and if (i) the annulment of the
acceleration of Notes would not conflict with any judgment or decree of a court
of competent jurisdiction and (ii) all existing Events of Default, except
nonpayment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes have been cured or waived.

          SECTION 6.02. Acceleration. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the principal, premium, if any,
accrued interest and Liquidated Damages, if any, of the Notes to be due and
payable by notice in writing to the Company and (if from the Holders) the
Trustee specifying the respective Event of Default and it is a "notice of
acceleration", and upon receipt of such notice the same shall become due and
payable upon the first to occur of an acceleration under any issue of then
outstanding Designated Senior Debt; or (2) five Business Days after receipt by
the Company and each Representative of holders of Designated Senior Debt then
outstanding of such notice of acceleration, unless all Events of Default
specified in their respective notices of acceleration shall have been cured
within said five Business Day period. Notwithstanding the foregoing, in the case
of an Event of Default described in clause (h) or (i) of Section 6.01, with
respect to the Company or any Significant Subsidiary (or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary),
all outstanding Notes will become due and payable immediately without further
action or notice.

          SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

                                       69



          The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

          SECTION 6.04. Waiver of Past Defaults. Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of,
premium and Liquidated Damages, if any, or interest on, the Notes (including in
connection with an offer to purchase) (provided, however, that the Holders of a
majority in aggregate principal amount of the then outstanding Notes may rescind
an acceleration and its consequences, including any related payment default that
resulted from such acceleration). The Company shall deliver to the Trustee an
Officers' Certificate stating that the requisite percentage of Holders have
consented to such waiver and attaching copies of such consents. In case of any
such waiver, the Company, the Trustee and the Holders shall be restored to their
former positions and rights hereunder and under the Notes, respectively. This
Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the TIA and such
Section 316(a)(1)(B) of the TIA is hereby expressly excluded from this Indenture
and the Notes, as permitted by the TIA. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.

          SECTION 6.05. Control by Majority. Subject to Section 2.09, holders of
a majority in principal amount of the then outstanding Notes may direct in
writing the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of Holders of Notes not taking part in such direction, and the
Trustee shall have the right to decline to follow any such direction, if the
Trustee, being advised by counsel, determines that such action so directed may
not be lawfully taken or if the Trustee, in good faith shall by a Responsible
Officer, determine that the proceedings so directed may involve the Trustee in
personal liability; provided that the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction. In the
event the Trustee takes any action or follows any direction pursuant to this
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against any loss or expense caused by taking such action
or following such direction. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.

          SECTION 6.06. Limitation on Suits. A Holder of a Note may pursue a
remedy with respect to this Indenture, the Notes or the Note Guarantees only if:

          (a) the Holder of a Note gives to the Trustee written notice of a
     continuing Event of Default;

                                       70



          (b) the Holders of at least 25% in principal amount of the then
     outstanding Notes make a written request to the Trustee to pursue the
     remedy;

          (c) such Holder of a Note or Holders of Notes offer and, if requested,
     provide to the Trustee indemnity satisfactory to the Trustee against any
     loss, liability or expense;

          (d) the Trustee does not comply with the request within 60 days after
     receipt of the request and the offer and, if requested, the provision of
     indemnity; and

          (e) during such 60-day period the Holders of a majority in principal
     amount of the then outstanding Notes do not give the Trustee a direction
     inconsistent with the request.

          A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

          SECTION 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal, premium and Liquidated Damages, if
any, and interest on the Note, on or after the respective due dates expressed in
the Note (including in connection with an offer to purchase), or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.

          SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01 (a) or (b) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal of, premium and
Liquidated Damages, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

          SECTION 6.09. Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other securities or property
payable or deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be

                                       71



secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

          SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:

          First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

          Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and

          Third: to the Company or to such party as a court of competent
jurisdiction shall direct.

          The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

          SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit
by Holders of more than 10% in principal amount of the then outstanding Notes.

                                    ARTICLE 7

                                     TRUSTEE

          SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in its exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.

          (b) Except during the continuance of an Event of Default:

                                       72



          (i) the duties of the Trustee shall be determined solely by the
     express provisions of this Indenture and the Trustee need perform only
     those duties that are specifically set forth in this Indenture and no
     others, and no implied covenants or obligations shall be read into this
     Indenture against the Trustee; and

          (ii) in the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     the Trustee shall examine the certificates and opinions to determine
     whether or not they conform to the requirements of this Indenture (but need
     not confirm or investigate the accuracy of mathematical calculations or
     other facts purported to be stated therein).

          (c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

          (i) this paragraph does not limit the effect of paragraph (b) of this
     Section;

          (ii) the Trustee shall not be liable for any error of judgment made in
     good faith by a Responsible Officer, unless it is proved that the Trustee
     was negligent in ascertaining the pertinent facts; and

          (iii) the Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.05 hereof.

          (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.

          (e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

          (f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money or
assets held in trust by the Trustee need not be segregated from other funds or
assets except to the extent required by law.

          SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely
upon any document (whether in its original or facsimile form) believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require (other than in connection with the Exchange Offer
contemplated by

                                       73



Section 2.06(f) unless required by the TIA) an Officers' Certificate or an
Opinion of Counsel or both. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.

          (c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent or attorney
appointed with due care.

          (d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

          (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

          (f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities that might be incurred by it in compliance with such request or
direction.

          (g) The Trustee shall not be deemed to have knowledge of any Default
or Event of Default except (i) any Event of Default occurring pursuant to
Section 6.01(a) or 6.01(b) or (ii) any Event of Default of which the Trustee
shall have received written notification or otherwise obtained actual knowledge.

          SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.

          SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or any other document in connection
with the sale of the Notes or pursuant to this Indenture other than its
certificate of authentication.

          SECTION 7.05. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to the Holders of the Notes

                                       74



a notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest or Liquidated Damages on any Note, the Trustee may
withhold the notice if and so long as the board of directors, the executive
committee or a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.

          SECTION 7.06. Reports by Trustee to the Holders of the Notes. Within
60 days after each September 1 beginning with the September 1 following the date
of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (S) 313(a) (but if no event described in TIA (S)
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c).

          A copy of each report at the time of its mailing to the Holders of the
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
securities exchange or of any delisting thereof.

          SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel and
any taxes or other expenses incurred by a trust created pursuant to Section 8.04
hereof.

          The Company shall indemnify the Trustee and its agents against any and
all losses, liabilities, claims, damages or expenses (including compensation,
fees, disbursements and expenses of Trustee's agents and counsel) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense is judicially determined to have been caused by to its own negligence or
bad faith. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.

          The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.

                                       75



          To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture. The Trustee's right to receive payment of any
amounts due under this Section 7.07 shall not be subordinated to any other
liability or Indebtedness of the Company.

          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

          The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.

          SECTION 7.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.

          The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:

          (a) the Trustee fails to comply with Section 7.10 hereof;

          (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

          (c) a Custodian or public officer takes charge of the Trustee or its
property; or

          (d) the Trustee becomes incapable of acting.

          If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

          If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition at the expense of the Company any court of competent
jurisdiction for the appointment of a successor Trustee.

          If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

                                       76



          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.

          SECTION 7.09. Successor Trustee by Merger, etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.

          SECTION 7.10. Eligibility; Disqualification. There shall at all times
be a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.

          This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
of TIA (S) 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.

          SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee is subject to TIA (S)311(a), excluding any creditor relationship listed
in TIA (S)311(b). A Trustee who has resigned or been removed shall be subject to
TIA (S)311(a) to the extent indicated therein.

                                    ARTICLE 8

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

          SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or Section 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8

          SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.02 hereof of the option applicable to this Section
8.02, the Company shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be deemed to have been discharged from its obligations
with respect to all outstanding Notes and all obligations of

                                       77



the Guarantors shall be deemed to have been discharged with respect to their
obligations under the Subsidiary Guarantees on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company and the Guarantors shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and Subsidiary Guarantees, respectively, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, interest and Liquidated Damages,
if any, on such Notes when such payments are due, (b) the Company's and the
Guarantor's obligations with respect to such Notes under Article 2 and Section
4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (d)
this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.

          SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, the Company
and each of the Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be released from their respective obligations
under the covenants set forth in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12,
4.14, 4.15, 4.17, 4.18, 4.19 and 4.20 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(g)
hereof shall not constitute Events of Default.

          SECTION 8.04. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of either Section 8.02
or 8.03 hereof to the outstanding Notes:

          In order to exercise either Legal Defeasance or Covenant Defeasance:

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          (i) the Company must irrevocably deposit with the Trustee, in trust,
     for the benefit of the Holders of the Notes, cash in U.S. dollars,
     non-callable Government Securities, or a combination thereof, in such
     amounts as shall be sufficient, in the opinion of a nationally recognized
     firm of independent public accountants, to pay the principal of, premium
     and Liquidated Damages, if any, and interest on the outstanding Notes on
     the stated maturity or on the applicable redemption date, as the case may
     be, and the Company must specify whether the Notes are being defeased to
     maturity or to a particular redemption date;

          (ii) in the case of an election under Section 8.02 hereof, the Company
     shall have delivered to the Trustee an Opinion of Counsel reasonably
     acceptable to the Trustee confirming that (A) the Company has received
     from, or there has been published by, the Internal Revenue Service a ruling
     or (B) since the date of this Indenture, there has been a change in the
     applicable federal income tax law, in either case, to the effect that, and
     based thereon such Opinion of Counsel shall confirm that, the Holders of
     the outstanding Notes shall not recognize income, gain or loss for federal
     income tax purposes as a result of such Legal Defeasance and shall be
     subject to federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such Legal Defeasance had
     not occurred;

          (iii) in the case of an election under Section 8.03 hereof, the
     Company shall have delivered to the Trustee an Opinion of Counsel
     reasonably acceptable to the Trustee confirming that the Holders of the
     outstanding Notes shall not recognize income, gain or loss for federal
     income tax purposes as a result of such Covenant Defeasance and shall be
     subject to federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such Covenant Defeasance
     had not occurred;

          (iv) no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit (other than a Default or Event of
     Default resulting from the borrowing of funds to be applied to such
     deposit);

          (v) such Legal Defeasance or Covenant Defeasance shall not result in a
     breach or violation of, or constitute a default under any material
     agreement or instrument to which the Company or any of its Subsidiaries is
     a party or by which the Company or any of its Subsidiaries is bound,
     including the Credit Agreement and the Senior Unsecured Term Loan
     Agreement;

          (vi) the Company shall have delivered to the Trustee an Officers'
     Certificate stating that the deposit was not made by the Company with the
     intent of preferring the Holders of Notes over any other creditors of the
     Company with the intent of defeating, hindering, delaying or defrauding any
     other creditors of the Company or others; and

          (vii) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent, including, without limitation, the conditions set forth in this
     Section 8.04, provided for or relating to the Legal Defeasance or the
     Covenant Defeasance have been complied with.

                                       79



          SECTION 8.05. Deposited Money and Cash Equivalents to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money
and non-callable Cash Equivalents (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

          The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable Cash
Equivalents deposited pursuant to Section 8.04(i) hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

          Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Cash Equivalents held by it as provided
in Section 8.05 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.05(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

          SECTION 8.06. Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, interest, or Liquidated Damages,
if any, on any Note and remaining unclaimed for two years after such principal,
and premium, if any, interest, or Liquidated Damages, if any, has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
shall be repaid to the Company.

          SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable
to apply any United States dollars or non-callable Government Securities in
accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or

                                       80



8.03 hereof, as the case may be; provided, however, that, if the Company makes
any payment of principal of, premium, if any, or interest on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.

                                    ARTICLE 9

                        AMENDMENT, SUPPLEMENT AND WAIVER

          SECTION 9.01. Without Consent of Holders of Notes. Notwithstanding
Section 9.02 of this Indenture, without the consent of any Holder of Notes, the
Company, the Guarantors and the Trustee may amend or supplement this Indenture
or the Notes:

          (a) to cure any ambiguity, defect, error or inconsistency;

          (b) to provide for uncertificated Notes in addition to or in place of
     certificated Notes;

          (c) to provide for the assumption of the Company's or any Guarantor's
     obligations to Holders of Notes in the case of a merger or consolidation or
     sale of all or substantially all of the assets of the Company or of such
     Guarantor;

          (d) to make any change that would provide any additional rights or
     benefits to the Holders of Notes or that does not adversely affect in any
     material respect the legal rights under this Indenture of any such Holder;

          (e) to comply with requirements of the SEC in order to effect or
     maintain the qualification of this Indenture under the Trust Indenture Act;

          (f) to provide for the issuance of Additional Notes in accordance with
     the limitations set forth in this Indenture as of the date hereof;

          (g) to add Guarantors with respect to Notes or to secure the Notes;

          (h) to comply with the rules of any applicable securities depositary;

          (i) to provide for a successor trustee in accordance with the terms of
     this Indenture or to otherwise comply with any requirement of this
     Indenture; or

          (j) to conform the text of this Indenture or the Notes to any
     provision of the "Description of Notes" section of the Offering Memorandum
     to the extent that such provision was intended to be a verbatim recitation
     of text of such section.

          Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02(b) hereof stating that such amended or supplemental Indenture complies with
this Section 9.01, the Trustee shall join with the Company in the execution of
any amended or supplemental Indenture authorized or

                                       81



permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.

          SECTION 9.02. With Consent of Holders of Notes. Except as provided
below in this Section 9.02, the Company and the Trustee may amend or supplement
this Indenture (including Sections 3.09, 4.10 and 4.14 hereof) and the Notes
with the consent of the Holders of at least a majority in principal amount of
the Notes (including Additional Notes, if any) then outstanding voting as a
single class (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, the Notes), and,
subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default or compliance with any provision of this Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including Additional Notes, if any) voting as a single
class (including, without limitation, consents obtained in connection with a
tender offer or exchange offer for, the Notes). Without the consent of at least
75% in aggregate principal amount of the Notes then outstanding (including
Additional Notes, if any) voting as a single class (including consents obtained
in connection with a purchase of, or tender offer or exchange offer for, the
Notes), no waiver or amendment to this Indenture may make any change in the
provisions of Article 10 hereof that adversely affects the rights of any Holder
of Notes. Furthermore, neither Article 8, Article 10 nor Section 11.02 shall be
amended or modified without the consent of the Administrative Agent under the
Credit Agreement. Section 2.08 hereof shall determine which Notes are considered
to be "outstanding" for purposes of this Section 9.02.

          Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02(b) hereof stating that
any such amended or supplemental Indenture complies with this Section 9.02, the
Trustee shall join with the Company in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.

          It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.

          After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.

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          Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes (including Additional Notes, if any)
then outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
nonconsenting Holder):

          (a) reduce the principal amount of Notes whose Holders must consent to
     an amendment, supplement or waiver;

          (b) reduce the principal of or change the fixed maturity of any Note
     or alter the provisions, or waive any payment, with respect to the
     redemption of the Notes, except with respect to Sections 3.09, 4.10 and
     4.14 hereof;

          (c) reduce the rate of or change the time for payment of interest on
     any Note;

          (d) waive a Default or Event of Default in the payment of principal of
     or premium, if any, or interest or Liquidated Damages, if any, on the Notes
     (except a rescission of acceleration of the Notes (including Additional
     Notes, if any) by the Holders of at least a majority in aggregate principal
     amount of the Notes and a waiver of the payment default that resulted from
     such acceleration);

          (e) make any Note payable in money other than U. S. dollars;

          (f) make any change in the provisions of this Indenture relating to
     waivers of (i) past Defaults or (ii) the rights of the Holders of the Notes
     to receive payments of principal of or premium, if any, or interest or
     Liquidated Damages, if any, on the Notes;

          (g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
     amendment and waiver provisions; or

          (h) release any Guarantor from any of its obligations under its Note
     Guarantee of these Notes or this Indenture, except in accordance with the
     terms of this Indenture.

          SECTION 9.03. Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall be set forth in a amended or
supplemental Indenture that complies with the TIA as then in effect.

          SECTION 9.04. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by such Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.

                                       83



          SECTION 9.05. Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all Notes may issue and
the Trustee shall, upon receipt of an Authentication Order, authenticate new
Notes that reflect the amendment, supplement or waiver.

          Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

          SECTION 9.06. Trustee to Sign Amendments, etc. The Trustee shall sign
any amended or supplemental Indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amendment
or supplemental Indenture until the Board of Directors approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.01 hereof) shall be fully protected in relying upon,
in addition to the documents required by Section 13.04 hereof, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such amended
or supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's rights, duties or immunities
under this Indenture or otherwise. In signing any amendment, supplement or
waiver, the Trustee shall be entitled to receive an indemnity reasonably
satisfactory to it.

          SECTION 9.07. Payments for Consent. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, pay or
cause to be paid any consideration to or for the benefit of any Holder of Notes
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Notes unless such consideration is
offered to be paid and is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.

                                   ARTICLE 10

                                  SUBORDINATION

          SECTION 10.01. Agreement to Subordinate. The Company agrees, and each
Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes
is subordinated in right of payment, to the extent and in the manner provided in
this Article 10, to the prior payment in full in cash and Cash Equivalents of
all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.

          SECTION 10.02. Liquidation; Dissolution; Bankruptcy. The holders of
Senior Debt of the Company will be entitled to receive payment in full in cash
and Cash Equivalents of all Obligations due in respect of Senior Debt of the
Company (including interest after the commencement of any bankruptcy proceeding
at the rate specified in the applicable Senior Debt of the Company) before the
Holders of Notes will be entitled to receive any payment with respect to the
Notes, and until all Obligations with respect to Senior Debt of the Company are

                                       84



paid in full in cash or Cash Equivalents, any distribution, to which the Holder
would be entitled shall be made to the holders of such Senior Debt (except that
Holders of Notes may receive and retain Permitted Junior Securities and payments
made from the trust pursuant to Article 8 hereof), in the event of any
distribution to creditors of the Company: (i) in a liquidation or dissolution of
the Company; (ii) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property; (iii) in an
assignment by the Company for the benefit of its creditors; or (iv) in any
marshaling of the Company's assets and liabilities.

          SECTION 10.03. Default on Designated Senior Debt. The Company may not
make any payment in respect of the Notes (except in Permitted Junior Securities
or from the trust pursuant to Article 8 hereof).

          (a) In the event of and during the continuation beyond any applicable
     grace period of any default in the payment of principal of, interest or
     premium, if any, on any Designated Senior Debt, or any Obligation owing
     from time to time under or in respect of Senior Debt, or in the event that
     any event of default (other than a payment default) with respect to any
     Designated Senior Debt shall have occurred and be continuing and shall have
     resulted in such Designated Senior Debt becoming or being declared due and
     payable prior to the date on which it would otherwise have become due and
     payable; or

          (b) If any event of default other than as described in clause (a)
     above with respect to any Designated Senior Debt shall have occurred and be
     continuing permitting the holders of such Designated Senior Debt or the
     holders of any series thereof (or their Representative or Representatives)
     to declare such Designated Senior Debt due and payable prior to the date on
     which it would otherwise have become due and payable;

               (1) in case of any payment or nonpayment default specified in
          clause (a), unless and until such default shall have been cured or
          waived in writing in accordance with the instruments governing such
          Designated Senior Debt or such acceleration shall have been rescinded
          or annulled, or

               (2) in case of any nonpayment event of default specified in
          clause (b), during the period (a "Payment Blockage Period") commencing
          on the date the Company or the Trustee receives written notice (a
          "Payment Blockage Notice") of such event of default from a
          Representative of the holders of such Designated Senior Debt (which
          notice shall be binding on the Trustee and the Holders of Notes as to
          the occurrence of such a nonpayment event of default) and ending on
          the earlier of:

                    (A) 179 days after such date; and

                    (B) the date, if any, on which such Designated Senior Debt
               to which such default relates is paid in full in cash or such
               default is cured or waived in writing in accordance with the
               instruments governing such Designated Senior Debt by the holders
               of such Designated Senior Debt; and

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                    (C) the date the Trustee receives notice from the
               representative rescinding the Payment Blockage Notice.

          (c) No new Payment Blockage Notice may be delivered to the Company or
     the Trustee that would start a new Payment Blockage Period unless and
     until: (i) 360 days have elapsed since the delivery of the immediately
     prior Payment Blockage Notice that started a Payment Blockage Period; and
     (ii) all scheduled payments of principal, interest and premium and
     Liquidated Damages, if any, on the Notes that have come due have been paid
     in full in cash. No nonpayment event of default which existed or was
     continuing with respect to the Designated Senior Debt on the date of
     delivery of any Payment Blockage Notice to the Trustee shall be or be made
     the basis for the commencement of any subsequent Payment Blockage Period
     unless such event of default is cured or waived for a period of not less
     than 90 consecutive days.

          SECTION 10.04. Acceleration of Securities. If payment of the
Securities is accelerated because of an Event of Default, the Company and the
Trustee shall promptly notify holders of Senior Debt of the acceleration.

          SECTION 10.05. When Distribution Must Be Paid Over. In the event that
the Trustee or any Holder receives any payment of any Obligations with respect
to the Notes (except in Permitted Junior Securities or from the trust pursuant
to Article 8 hereof) at a time when (i) the payment is prohibited by Article 10,
and (ii) the Trustee or such Holder, as applicable, has actual knowledge that
such payment is prohibited by Article 10 hereof (provided that such actual
knowledge shall not be required in the case of any payment default on Designated
Senior Debt of the Company) such payment shall be held by the Trustee or such
Holder, as applicable, in trust for the benefit of, and shall be paid forthwith
over and delivered, upon written request of the holder of such Senior Debt or
upon any payment default on any Designated Senior Debt, to the holders of Senior
Debt as their interests may appear or their Representative under this Indenture
or other agreement (if any) pursuant to which Senior Debt may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.

          With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.

          SECTION 10.06. Notice by the Company. The Company shall promptly
notify the Trustee and the Paying Agent in writing of any facts known to the
Company that would cause a payment of any Obligations with respect to the Notes
to violate this Article 10, but

                                       86



failure to give such notice shall not affect the subordination of the Notes to
the Senior Debt as provided in this Article 10.

          SECTION 10.07. Subrogation. After all Senior Debt is paid in full and
until the Notes are paid in full, Holders of Notes shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Debt to receive distributions applicable to Senior Debt to
the extent that distributions otherwise payable to the Holders of Notes have
been applied to the payment of Senior Debt. A distribution made under this
Article 10 to holders of Senior Debt that otherwise would have been made to
Holders of Notes is not, as between the Company and Holders, a payment by the
Company on the Notes.

          SECTION 10.08. Relative Rights. This Article 10 defines the relative
rights of Holders of Notes and holders of Senior Debt. Nothing in this Indenture
shall:

          (a) impair, as between the Company and Holders of Notes, the
     obligation of the Company, which is absolute and unconditional, to pay
     principal of and interest on the Notes in accordance with their terms;

          (b) affect the relative rights of Holders of Notes and creditors of
     the Company other than their rights in relation to holders of Senior Debt;
     or

          (c) prevent the Trustee or any Holder of Notes from exercising its
     available remedies upon a Default or Event of Default, subject to the
     rights of holders and owners of Senior Debt to receive distributions and
     payments otherwise payable to Holders of Notes.

          If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.

          SECTION 10.09. Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.

          SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Debt, the
distribution may be made and the notice given to their Representative.

          Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.

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          SECTION 10.11. Rights of Trustee and Paying Agent. Notwithstanding the
provisions of this Article 10 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the Paying Agent may continue to make payments on the Notes, unless
the Trustee shall have received at its Corporate Trust Office at least five
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Notes to violate
this Article 10. Only the Company or a Representative may give the notice.
Nothing in this Article 10 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.

          The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

          SECTION 10.12. Authorization to Effect Subordination. Each Holder of
Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on
such Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article 10, and appoints the
Trustee to act as such Holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.09 hereof at least 30
days before the expiration of the time to file such claim, the lenders under the
Credit Agreement are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.

                                   ARTICLE 11

                                 NOTE GUARANTEES

          SECTION 11.01. Guarantee. Subject to this Article 11 each of the
Guarantors hereby, jointly and severally, unconditionally, as primary obligor
and not merely as surety (such guarantee to be referred to herein as the "Note
Guarantee"), guarantees to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity and enforceability of this Indenture, the Notes or the obligations
of the Company hereunder or thereunder, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful (subject in all cases to any applicable grace period provided herein),
and all other obligations of the Company to the Holders or the Trustee hereunder
or thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately. Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.

          The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this

                                       88



Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Subject to Section 6.06 hereof, each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenant that this Note Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes and
this Indenture.

          If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

          Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Note Guarantee.

          SECTION 11.02. Subordination of Note Guarantee. The Obligations of
each Guarantor under its Note Guarantee pursuant to this Article 11 shall be
junior and subordinated to the Guarantee of any Senior Debt of such Guarantor on
the same basis as the Notes are junior and subordinated to Senior Debt of the
Company. For the purposes of the foregoing sentence, the Trustee and the Holders
shall have the right to receive and/or retain payments by any of the Guarantors
only at such times as they may receive and/or retain payments in respect of the
Notes pursuant to this Indenture, including Article Ten hereof.

          SECTION 11.03. Limitation on Guarantor Liability. Each Guarantor, and
by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Note Guarantee.
To effectuate the foregoing intention, the Trustee, the Holders and the
Guarantors hereby irrevocably agree that the obligations of such Guarantor will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the

                                       89



obligations of such other Guarantor under this Article Eleven, result in the
obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.

          SECTION 11.04. Execution and Delivery of Note Guarantee. Each
Guarantor hereby agrees that its execution and delivery of this Indenture or any
supplemental indentures pursuant to Section 4.18 hereof shall evidence its Note
Guarantee set forth in Section 11.01 without the need for any further notation
on the Notes.

          Each of the Guarantors hereby agrees that its Note Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation relating to such Note Guarantee.

          If an Officer of a Guarantor whose signature is on this Indenture or
any supplemental indenture, entered into pursuant to Section 4.18 or otherwise,
no longer holds that office at the time the Trustee authenticates such Notes or
at any time thereafter, such Guarantor's Note Guarantee shall be valid
nevertheless.

          The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Note Guarantee set forth
in this Indenture on behalf of the Guarantor.

          In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.18 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture in accordance with Section 4.18 hereof and this Article 11, to
the extent applicable.

          SECTION 11.05. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 11.06, a Guarantor may not sell or
otherwise dispose of all or substantially all of its assets, or consolidate with
or merge with or into (whether or not such Guarantor is the surviving Person)
another Person unless:

          (a) immediately after giving effect to such transaction, no Default or
     Event of Default exists; and

          (b) either:

               (i) the Person acquiring the property in any such sale or
          disposition or the Person formed by or surviving any such
          consolidation or merger is a corporation, partnership or limited
          liability company, organized or existing under (i) the laws of the
          United States, any state thereof or the District of Columbia or (ii)
          the laws of the same jurisdiction as that Guarantor and, in each case,
          assumes all the obligations of that Guarantor under this Indenture,
          its Note Guarantee and the Registration Rights Agreement pursuant to a
          supplemental indenture satisfactory to the Trustee; or

               (ii) such sale or other disposition complies with Section 4.10,
          including the application of the Net Proceeds therefrom.

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          In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by a Guarantor,
such successor Person shall succeed to and be substituted for a Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.

          Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.

          SECTION 11.06. Releases Following Sale of Assets. Any Guarantor will
be released and relieved of any obligations under its Note Guarantee, (i) in
connection with any sale or other disposition of all or substantially all of the
assets of that Guarantor (including by way of merger or consolidation) to a
Person that is not (either before or after giving effect to such transaction) a
Restricted Subsidiary of the Company, if the sale or other disposition of all or
substantially all of the assets of that Guarantor complies with Section 4.10
hereof, including the application of the Net Proceeds therefrom; (ii) in
connection with any sale of all of the Capital Stock of a Guarantor to a Person
that is not (either before or after giving effect to such transaction) a
Restricted Subsidiary of the Company, if the sale of all such Capital Stock of
that Guarantor complies with Section 4.10 hereof, including the application of
the Net Proceeds therefrom; (iii) if the Company properly designates any
Restricted Subsidiary that is a Guarantor (other than the Egg Products Division)
as an Unrestricted Subsidiary in accordance with the terms hereof; or (iv) in
connection with any sale of Capital Stock of a Guarantor (other than the Egg
Products Division) to a Person that results in the Guarantor no longer being a
Subsidiary of the Company, if the sale of such Capital Stock of that Guarantor
complies with Section 4.10, including the application of the Net Proceeds
therefrom. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee.

          Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article Eleven.

          SECTION 11.07. Severability. In case any provision of this Note
Guarantee shall be invalid, illegal or unenforceable, that portion of such
provision that is not invalid, illegal

                                       91



or unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                                   ARTICLE 12

                           SATISFACTION AND DISCHARGE

          SECTION 12.01. Satisfaction and Discharge. (a) Subject to the
provisions of Sections 12.04 and 12.05, this Indenture shall be discharged and
shall cease to be of further effect as to all Notes issued hereunder, when the
Company or any Guarantor have paid or caused to be paid all sums payable by it
under the Indenture and either:

          (1) all Notes that have been  authenticated  (except  lost,  stolen or
     destroyed Notes that have been replaced or paid and Notes for whose payment
     money has theretofore been deposited in trust and thereafter  repaid to the
     Company) have been delivered to the Trustee for cancellation; or

          (2) (i) all Notes  that have not been  delivered  to the  Trustee  for
     cancellation  have  become  due and  payable  by reason of the  making of a
     notice of  redemption  or otherwise or shall become due and payable  within
     one year,  including  as a result of a  redemption  notice  properly  given
     pursuant to the Indenture, and the Company or any Guarantor has irrevocably
     deposited  or caused to be  deposited  with the  Trustee as trust  funds in
     trust  solely  for the  benefit  of the  Holders,  cash  in  U.S.  dollars,
     non-callable  Government  Securities,  or a  combination  thereof,  in such
     amounts as shall be sufficient without consideration of any reinvestment of
     interest,  to pay and  discharge the entire  indebtedness  on the Notes not
     delivered to the Trustee for cancellation for principal,  premium,  accrued
     interest  and  Liquidated  Damages,  if any,  to the  date of  maturity  or
     redemption;  (ii) no Default or Event of Default shall have occurred and be
     continuing  on the date of such  deposit or shall occur as a result of such
     deposit and such deposit  shall not result in a breach or violation  of, or
     constitute a default  under,  any other  instrument to which the Company or
     any of its  Subsidiaries  is a party or by which the  Company or any of its
     Subsidiaries  is bound;  and (iii) the  Company has  delivered  irrevocable
     instructions  to the Trustee  under this  Indenture to apply the  deposited
     money toward the payment of the Notes at maturity or the  redemption  date,
     as the case may be.

          (b) The Company shall deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.

          (c) Notwithstanding the above, the Trustee shall pay to the Company
from time to time upon its request any cash or Government Securities held by it
as provided in this section which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
delivered to the Trustee, are in excess of the amount thereof that would then be
required to be deposited to effect a satisfaction and discharge under this
Article 12.

                                       92



          SECTION 12.02. Deposited Money and Government Securities to Be Held in
Trust. Subject to Section 12.03 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 12.02, the
"Trustee") pursuant to Section 12.01 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest, and
Liquidated Damages, if any, but such money be segregated from other funds except
to the extent required by law.

          SECTION 12.03. Repayment to the Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, interest, or Liquidated Damages,
if any, on any Note and remaining unclaimed for two years after such principal,
premium, if any, interest, or Liquidated Damages, if any, has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times or The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining shall be
repaid to the Company.

          SECTION 12.04. Survival. In the event that the Company makes (or
causes to be made) an irrevocable deposit with the Trustee for the benefit of
the Holders pursuant to Section 12.01(a)(2) hereof, prior to the date of
maturity or redemption, as the case may be, the following provisions of the
Indenture shall survive until otherwise terminated or discharged hereunder:

          (1) the rights of Holders of outstanding Notes to receive payments in
     respect of the principal of, premium, if any, interest and Liquidated
     Damages, if any, on such Notes when such payments are due from the trust;

          (2) the Company's obligations with respect to such Notes under Article
     2 and Section 4.02 hereof;

          (3) the rights,  powers,  trusts, duties and immunities of the Trustee
     hereunder and the Company's obligations in connection therewith; and

          (4) this Article 12.

          SECTION 12.05. Reinstatement. If the Trustee or Paying Agent is unable
to apply any Government Securities in accordance with Section 12.02 hereof, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture

                                       93



and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 12.01(a)(2) hereof until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 12.02
hereof; provided, however, that, if the Company makes any payment of principal
of, premium, if any, interest and Liquidated Damages, if any, on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.

                                   ARTICLE 13

                                  MISCELLANEOUS

          SECTION 13.01. Trust Indenture Act Controls. This Indenture is subject
to the provisions of the TIA that are required to be a part of this Indenture,
and shall, to the extent applicable, be governed by such provisions. If any
provision of this Indenture modifies any TIA provision that may be so modified,
such TIA provision shall be deemed to apply to this Indenture as so modified. If
any provision of this Indenture excludes any TIA provision that may be so
excluded, such TIA provision shall be excluded from this Indenture.

          The provisions of TIA (S)(S)310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.

          SECTION 13.02. Notices. Any notice or communication by the Company,
any Guarantor or the Trustee to the others is duly given if in writing and
delivered in Person or mailed by first class mail (registered or certified,
return receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the others' address

          If to the Company and/or any Guarantor:

          Michael Foods, Inc.
          301 Carlson Parkway
          Suite 400
          Minnetonka, Minnesota  55305
          Telecopier No.: (952) 258-4000

          Attention: John D. Reedy, Executive Vice President
                     and Chief Financial Officer

                                       94



          With a copy to:

          Weil, Gotshal & Manges, LLP
          767 Fifth Avenue
          New York, New York  10153
          Telecopier No.:  (212) 310-8007

          Attention:  Todd C. Chandler

          If to the Trustee:

          Wells Fargo Bank Minnesota, National Association
          Corporate Trust Services
          213 Court Street
          Suite 703
          Middletown, Connecticut  06457
          Telecopier No.:  (860) 704-6219

          Attention:  Joseph O'Donnell

          The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

          All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

          Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.

          If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

          If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

          SECTION 13.03. Communication by Holders of Notes with Other Holders of
Notes. Holders may communicate pursuant to TIA (S)312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
(S)312(c).

                                       95



          SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture (other than in connection with the Exchange Offer
contemplated by Section 2.06(e) or under Section 2.02 hereof unless required by
the TIA), the Company shall furnish to the Trustee:

          (a) an Officers' Certificate in form and substance reasonably
     satisfactory to the Trustee (which shall include the statements set forth
     in Section 13.05 hereof) stating that, in the opinion of the signers, all
     conditions precedent and covenants, if any, provided for in this Indenture
     relating to the proposed action have been satisfied;

          (b) an Opinion of Counsel in form and substance reasonably
     satisfactory to the Trustee (which shall include the statements set forth
     in Section 13.05 hereof) stating that, in the opinion of such counsel, all
     such conditions precedent and covenants have been satisfied; and

          (c) where applicable, a certificate or opinion by an independent
     certified public accountant satisfactory to the Trustee that complies with
     TIA Section 314(c).

          SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall
include:

          (a) a statement that the Person making such certificate or opinion has
     read such covenant or condition;

          (b) a brief statement as to the nature and scope of the examination or
     investigation upon which the statements or opinions contained in such
     certificate or opinion are based;

          (c) a statement that, in the opinion of such Person, he or she has
     made such examination or investigation as is necessary to enable him to
     express an informed opinion as to whether or not such covenant or condition
     has been satisfied; and

          (d) a statement as to whether or not, in the opinion of such Person,
     such condition or covenant has been satisfied.

          SECTION 13.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Holders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.

          SECTION 13.07. No Personal Liability of Directors, Officers, Employees
and Stockholders. No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Exchange
Notes, the Note Guarantees, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. Such waiver may not be
effective to waive

                                       96



liabilities under the federal securities laws and it is the view of the SEC that
such a waiver is against public policy.

          SECTION 13.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE
GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

          SECTION 13.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
All agreements of each Guarantor in this Indenture shall bind its successors,
except as otherwise provided in Section 11.05.

          SECTION 13.10. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors. All agreements of each Guarantor in
this Indenture shall bind its successors, except as otherwise provided in
Section 11.05.

          SECTION 13.11. Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

          SECTION 13.12. Counterpart Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.

          SECTION 13.13. Table of Contents, Headings, etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.

                         [Signatures on following page]

                                       97



                                   SIGNATURES

Dated as of November 20, 2003

                                            Very truly yours,

                                            MICHAEL FOODS, INC.


                                            By: /s/ Gregg A. Ostrander
                                                --------------------------------
                                                Name: Gregg A. Ostrander
                                                Title: Chief Executive Officer
                                                       and President


                                            CRYSTAL FARMS REFRIGERATED
                                            DISTRIBUTION COMPANY


                                            By: /s/ James D. Clarkson
                                                --------------------------------
                                                Name: James D. Clarkson
                                                Title: President


                                                NORTHERN STAR CO.


                                            By: /s/ James D. Clarkson
                                                --------------------------------
                                                Name: James D. Clarkson
                                                Title: President

                                       98



                                            KMS DAIRY, INC.


                                            By: /s/ James D. Clarkson
                                                --------------------------------
                                                Name: James D. Clarkson
                                                Title: President


                                            M. G. WALDBAUM COMPANY


                                            By: /s/ Bill L. Goucher
                                                --------------------------------
                                                Name: Bill L. Goucher
                                                Title: President


                                            PAPETTI ELECTROHEATING CORPORATION


                                            By: /s/ Bill L. Goucher
                                                --------------------------------
                                                Name: Bill L. Goucher
                                                Title: President


                                            PAPETTI'S HYGRADE EGG PRODUCTS, INC.


                                            By: /s/ Bill L. Goucher
                                                --------------------------------
                                                Name: Bill L. Goucher
                                                Title: President

                                       99



                                            CASA TRUCKING, INC.


                                            By: /s/ Gregg A. Ostrander
                                                --------------------------------
                                                Name: Gregg A. Ostrander
                                                Title: Chief Executive Officer
                                                       and President


                                            WISCO FARM COOPERATIVE


                                            By: /s/ John D. Reedy
                                                --------------------------------
                                                Name: John D. Reedy
                                                Title: Vice President-Finance


                                            WFC, INC.


                                            By: /s/ John D. Reedy
                                                --------------------------------
                                                Name: John D. Reedy
                                                Title: Vice President-Finance


                                            FARM FRESH FOODS, INC.


                                            By: /s/ James D. Clarkson
                                                --------------------------------
                                                Name: James D. Clarkson
                                                Title: President

                                      100



                                            MICHAEL FOODS OF DELAWARE, INC.


                                            By: /s/ Gregg A. Ostrander
                                                --------------------------------
                                                Name: Gregg A. Ostrander
                                                Title: Chief Executive Officer
                                                       and President


                                            MINNESOTA PRODUCTS, INC.


                                            By: /s/ James D. Clarkson
                                                --------------------------------
                                                Name: James D. Clarkson
                                                Title: President

                                      101



                                            WELLS FARGO BANK MINNESOTA, NATIONAL
                                            ASSOCIATION, as Trustee


                                            By: /s/ Robert L. Reynolds
                                                --------------------------------
                                                Name: Robert L. Reynolds
                                                Title: Vice President

                                      102



                                                                       EXHIBIT A

                                  FORM OF NOTE
                                 [Face of Note]

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

THIS NOTE AND ANY GUARANTEES OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY GUARANTEES OF THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE AND ANY GUARANTEES OF THIS NOTE)
(THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN



THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE (E)
PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

                                      A-2



                                            CUSIP        [144A        594079AB1]
                                                         [REG S       U59325AA5]
                                            ISIN         [REG S    USU59325AA54]

                               MICHAEL FOODS, INC.
                      8% Senior Subordinated Notes due 2013

No.                                                              $
    ---                                                           --------------

          MICHAEL FOODS, INC.promises to pay to CEDE & Co., or registered
assigns, the principal sum of            DOLLARS on November 15, 2013.
                              ----------

          Interest Payment Dates: May 15 and November 15

          Record Dates:           May 1 and November 1

          Initial Payment Date:   May 15, 2004

          Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

                            [SIGNATURE PAGE FOLLOWS]

                                      A-3



                                            Dated:  November 20, 2003

                                            Michael Foods, Inc.

                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

This is one of the Global
Notes referred to in the
within-mentioned Indenture:

WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION

as Trustee


By:
    ------------------------------------
           (Authorized Signatory)

                                      A-4




                             [Reverse Side of Note]

                               MICHAEL FOODS, INC.

                      8% Senior Subordinated Notes due 2013

          Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

          1. Interest. Michael Foods, Inc. , a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8%
per annum from the date hereof until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company shall pay interest and any Liquidated Damages
semi-annually on May 15 and November 15 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be May 15, 2004. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest shall be computed on the basis of a
360 [ ] day year of twelve 30 [ ] day months.

          2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
shall be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within the City and State of New York, or, at the option of the Company, payment
of interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds shall be required with respect
to principal of and interest, premium and Liquidated Damages on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

          3. Paying Agent and Registrar. Initially, Wells Fargo Bank Minnesota,
National Association, the Trustee under the Indenture, shall act as Paying Agent
and Registrar.

                                      A-5



The Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such capacity.

          4. Indenture. The Company issued the Notes under an Indenture dated as
of November 20, 2003 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Indenture pursuant to which
the Notes are issued provides that an unlimited aggregate principal amount of
Notes may be issued thereunder.

          5. Optional Redemption. Except as set forth in this paragraph 5 and
paragraph 6 below, the Notes shall not be redeemable at the Company's option
prior to November 15, 2008. Thereafter, the Company may redeem all or a part of
these Notes, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 15 of the years indicated below:

             Year                              Percentage
             ----                              ----------
             2008...........................    104.000%
             2009...........................    102.667%
             2010...........................    101.334%
             2011 and thereafter............    100.000%

Notwithstanding the foregoing, at any time prior to November 15, 2006, the
Company may on one or more occasions redeem up to 40% of the aggregate principal
amount of Notes originally issued under the Indenture at a redemption price of
108.00% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds of one or more Equity Offerings of the Company (or of the Parent to the
extent such proceeds are contributed to the common equity of the Company);
provided that at least 60% of the aggregate principal amount of Notes remains
outstanding immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries); and such redemption shall occur
within 90 days of the date of the closing of such Equity Offering.

          6. Mandatory Redemption. Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.

          7. Repurchase at Option of Holder. Upon the occurrence of a Change of
Control, each Holder of Notes will have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company will mail a notice
to each Holder describing the

                                      A-6



transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice.

          If the Company or a Restricted Subsidiary consummates any Asset Sales,
within 365 days of each date on which the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company will be required to make an offer to all
Holders of Notes (a "Repurchase Offer") to purchase the maximum principal amount
of Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase,
in accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes (including any Additional Notes) tendered pursuant
to a Repurchase Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are the subject
of an offer to purchase shall receive a Repurchase Offer from the Company prior
to any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Notes.

          8. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

          9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption. Also, the
Company need not exchange or register the transfer of any Notes for a period of
15 days before a selection of Notes to be redeemed.

          10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

          11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes and Additional Notes, if any, voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class.

                                      A-7



Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation or sale of all or substantially
all of the assets of the Company, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to allow any
Subsidiary to guarantee the Notes, to provide for the issuance of Additional
Notes in accordance with the limitations set forth in the Indenture, or to allow
any Guarantor to execute a supplemental indenture to the Indenture with respect
to the Notes.

          12. Defaults and Remedies. Events of Default include: (a) default for
30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not permitted by Article 10 of the Indenture);
(b) default in payment of the principal of or premium, if any, on the (whether
or not permitted by Article 10 of the Indenture); (c) failure by the Company or
any of its Restricted Subsidiaries to comply with the provisions of Sections
4.10, 4.14 and 5.01 of the Indenture; (d) failure by the Company or any of its
Restricted Subsidiaries for 45 days after notice from the Trustee or holders of
at least 25% in principal amount of the Notes (including Additional Notes, if
any) then outstanding to comply with any of the other agreements in the
Indenture; (e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or
is created after the date of the Indenture, if that default: (i) is caused by a
failure to make any payment when due at the final maturity of such Indebtedness
(a "Payment Default"); or (ii) results in the acceleration of such Indebtedness
prior to its express maturity; and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $15.0 million or more; (f) failure by
the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $15.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days after such judgments have become
non-appealable and, in the event such judgment is covered by insurance, an
enforcement proceeding has been commenced by any creditor upon such judgment or
decree that is not properly stayed; (g) except as permitted by the Indenture,
any Note Guarantee of a Guarantor (other than an Immaterial Guarantor) being
held in any judicial proceeding to be unenforceable or invalid or ceasing for
any reason to be in full force and effect or any Guarantor (other than an
Immaterial Guarantor), or any Person acting on behalf of any Guarantor, (other
than an Immaterial Guarantor) shall deny or disaffirm its obligations under its
Note Guarantee; and (h) certain events of bankruptcy or insolvency with respect
to the Company or any of its Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary.
In the event of a declaration of acceleration of the Notes because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (f) above, the declaration of acceleration of
the Notes shall be automatically annulled if the holders of any Indebtedness
described in clause (f) above have rescinded the declaration of acceleration in
respect of such Indebtedness within 30 days of the date of such declaration and
if (i) the

                                      A-8



annulment of the acceleration of Notes would not conflict with any judgment or
decree of a court of competent jurisdiction and (ii) all existing Events of
Default, except nonpayment of principal or interest on the Notes that became due
solely because of the acceleration of the Notes have been cured or waived. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
principal, premium, if any, accrued interest and Liquidated Damages, if any, of
the Notes to be due and payable immediately. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company or any Significant Subsidiary (or any
group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary), all outstanding Notes shall become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture, the Notes or the Notes Guarantees except as provided in the
Indenture. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

          13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

          14. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Company or any of the Guarantors, as such,
shall have any liability for any obligations of the Company or such Guarantor
under the Notes, the Note Guarantees or the Indenture or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the SEC that such a waiver is against public policy.

          15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

          16. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

          17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement, dated as of November 20, 2003, between the Company and the parties
named on the signature pages thereof or, in the case of Additional

                                      A-9



Notes, Holders of Restricted Global Notes and Restricted Definitive Notes shall
have the rights set forth in one or more registration rights agreements, if any,
between the Company and the other parties thereto, relating to rights given by
the Company to the purchasers of Additional Notes (collectively, the
"Registration Rights Agreement").

          18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

          19. Copies of Documents. The Company shall furnish to any Holder upon
written request and without charge a copy of the Indenture and/or the
Registration Rights Agreement. Requests may be made to:

          Michael Foods, Inc.
          301 Carlson Parkway
          Suite 400
          Minnetonka, Minnesota  55305

               Attention: John D. Reedy
                          Executive Vice President and
                          Chief Financial Officer

                                      A-10



                                 ASSIGNMENT FORM

          To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:
                                              ----------------------------------
                                                (Insert assignee's legal name)

- --------------------------------------------------------------------------------
             (Insert assignee's social security or tax I.D. number.)

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

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

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

- --------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)

and irrevocably appoint
                        --------------------------------------------------------

to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:
      ---------------------


                                      Your Signature:
                                                      --------------------------
                                                      (Sign exactly as your name
                                                      appears on the face of
                                                      this Note)


Signature Guarantee*:
                      ------------------------------

*    Participant in a recognized Signature Guarantee
     Medallion Program (or other signature guarantor
     acceptable to the Trustee).

                                      A-11



                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box
below:

                   [ ] Section 4.10      [ ] Section 4.14

          If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:

                                               $
                                                -----------------
Date:
      --------------


                                      Your Signature:
                                                      --------------------------
                                                      (Sign exactly as your name
                                                      appears on the face of
                                                      this Note)

                                      Tax Identification No.:
                                                              ------------------


Signature Guarantee*:
                      ------------------------------

*    Participant in a recognized Signature Guarantee
     Medallion Program (or other signature guarantor
     acceptable to the Trustee).

                                      A-12



                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Michael Foods, Inc.
301 Carlson Parkway
Suite 400
Minnetonka, Minnesota 55305
Telecopier No.: (952) 258-4000

Wells Fargo Bank Minnesota,
National Association
213 Court Street
Suite 703
Middletown, Connecticut 06457
Telecopier No.: (860) 704-6219

Attention: Corporate Trust Services

                    Re: 8% Senior Subordinated Notes due 2013

          Reference is hereby made to the Indenture, dated as of November 20,
2003 (the "Indenture"), between Michael Foods, Inc., as issuer (the "Company"),
and Wells Fargo Bank Minnesota, National Association, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.

                         , (the "Transferor") owns and proposes to transfer the
          ---------------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $           in such Note[s] or interests (the "Transfer"),
                     ----------
to            (the "Transferee"), as further specified in Annex A hereto. In
   ----------
connection with the Transfer, the Transferor hereby certifies that:

          [CHECK ALL THAT APPLY]

          1. Check if Transferee will take delivery of a beneficial interest in
the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions



on transfer enumerated in the Private Placement Legend printed on the 144A
Global Note and/or the Definitive Note and in the Indenture and the Securities
Act.

          2. Check if Transferee will take delivery of a beneficial interest in
the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture and
the Securities Act.

          3. Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Definitive Note pursuant to any provision
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):

          (a) such Transfer is being effected pursuant to and in accordance with
     Rule 144 under the Securities Act;

                                       or

          (b) such Transfer is being effected to the Company or a subsidiary
     thereof;

                                       or

          (c) such Transfer is being effected pursuant to an effective
     registration statement under the Securities Act and in compliance with the
     prospectus delivery requirements of the Securities Act;

                                       or

          (d) such Transfer is being effected to an Institutional Accredited
     Investor and pursuant to an exemption from the registration requirements of
     the Securities Act other

                                      B-2



     than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further
     certifies that it has not engaged in any general solicitation within the
     meaning of Regulation D under the Securities Act and the Transfer complies
     with the transfer restrictions applicable to beneficial interests in a
     Restricted Global Note or Restricted Definitive Notes and the requirements
     of the exemption claimed, which certification is supported by (1) a
     certificate executed by the Transferee in the form of Exhibit D to the
     Indenture and (2) if such Transfer is in respect of a principal amount of
     Notes at the time of transfer of less than $250,000, an Opinion of Counsel
     provided by the Transferor or the Transferee (a copy of which the
     Transferor has attached to this certification), to the effect that such
     Transfer is in compliance with the Securities Act. Upon consummation of the
     proposed transfer in accordance with the terms of the Indenture, the
     transferred beneficial interest or Definitive Note will be subject to the
     restrictions on transfer enumerated in the Private Placement Legend printed
     on the IAI Global Note and/or the Definitive Notes and in the Indenture and
     the Securities Act.

          4. Check if Transferee will take delivery of a beneficial interest in
an Unrestricted Global Note or of an Unrestricted Definitive Note.

          (b) Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

          (c) Check if Transfer is pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) he restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

          (d) Check if Transfer is pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to

                                      B-3



the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes or Restricted Definitive Notes and in the
Indenture.

          This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                        [Insert Name of Transferor]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

Dated:
       ---------------, -----

                                      B-4



                       ANNEX A TO CERTIFICATE OF TRANSFER

     1.   The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

          (a)  a beneficial interest in the:

               (i)  144A Global Note (CUSIP      ), or
                                            -----

               (ii) Regulation S Global Note (CUSIP      ), or
                                                    -----

               (iii) IAI Global Note (CUSIP      ); or
                                            -----

          (b)  a Restricted Definitive Note.

     2.   After the Transfer the Transferee will hold:

                                   [CHECK ONE]

          (a)  a beneficial interest in the:

               (i)  144A Global Note (CUSIP      ), or
                                            -----

               (ii) Regulation S Global Note (CUSIP      ), or
                                                    -----

               (iii) IAI Global Note (CUSIP       ); or
                                            ------

               (iv) Unrestricted Global Note (CUSIP      ); or
                                                    -----

          (b)  a Restricted Definitive Note; or

          (c)  an Unrestricted Definitive Note,

          in accordance with the terms of the Indenture.

                                       B-5



                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Michael Foods, Inc.
301 Carlson Parkway
Suite 400
Minnetonka, Minnesota 55305
Telecopier No.: (952) 258-4000

Wells Fargo Bank Minnesota,
National Association
213 Court Street
Suite 703
Middletown, Connecticut 06457
Telecopier No.: (860) 704-6219

Attention: Corporate Trust Services

          Re: 8% Senior Subordinated Notes due 2013

                                (CUSIP 594079AB1)

          Reference is hereby made to the Indenture, dated as of November 20,
2003 (the "Indenture"), between Michael Foods, Inc., as issuer (the "Company")
and Wells Fargo Bank Minnesota, National Association, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.

                          , (the "Owner") owns and proposes to exchange the
          ----------------
 Note[s] or interest in such Note[s] specified herein, in the principal amount
 of $              in such Note[s] or interests (the "Exchange"). In connection
     -------------
 with the Exchange, the Owner hereby certifies that:

          5. Exchange of Restricted Definitive Notes or Beneficial Interests in
a Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note

          (e) Check if Exchange is from Beneficial Interest in a Restricted
Global Note to Beneficial Interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the



beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

          (f) Check if Exchange is from Beneficial Interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

          (g) Check if Exchange is from Restricted Definitive Note to Beneficial
Interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

          (h) Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

          6. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes

          (i) Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

                                      C-2



          (j) Check if Exchange is from Restricted Definitive Note to Beneficial
Interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
144A Global Note, Regulation S Global Note, IAI Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.

          This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                        [Insert Name of Owner]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

Dated:
       ---------------, -----

                                      C-3



                                                                       EXHIBIT D

                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Michael Foods, Inc.
301 Carlson Parkway
Suite 400
Minnetonka, Minnesota 55305
Telecopier No.: (952) 258-4000

Wells Fargo Bank Minnesota,
National Association
213 Court Street
Suite 703
Middletown, Connecticut 06457
Telecopier No.: (860) 704-6219

          Re:  8% Senior Subordinated Notes due 2013

          Reference is hereby made to the Indenture, dated as of November 20,
2003 (the "Indenture"), between Michael Foods, Inc., as issuer (the "Company")
and Wells Fargo Bank Minnesota, National Association, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.

          In connection with our proposed purchase of $           aggregate
                                                       ----------
principal amount of:

          (a) a beneficial interest in a Global Note, or

          (b) a Definitive Note,

          we confirm that:

          7. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").

          8. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as



defined therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you and to the Company a signed letter substantially
in the form of this letter and, if such transfer is in respect of a principal
amount of Notes, at the time of transfer of less than $250,000, an Opinion of
Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.

          9. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.

          10. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

          11. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.

          You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.

                                        [Insert Name of Accredited Investor]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

Dated:
       ---------------, -----

                                      D-2



                                                                       EXHIBIT E

                         FORM OF SUPPLEMENTAL INDENTURE
                          TO ADD SUBSEQUENT GUARANTORS

          This Supplemental Indenture, dated as of                  (this
                                                   ----------------
"Supplemental Indenture"), among [NAME OF FUTURE GUARANTOR] (the "New
Guarantor"), Michael Foods, Inc. (together with its successors and assigns, the
"Company"), each other then existing Guarantor under the Indenture referred to
below (the "Guarantors"), and Wells Fargo Minnesota, National Association, as
Trustee under the Indenture referred to below.

                              W I T N E S S E T H:

          WHEREAS, the Company, the Guarantors and the Trustee have heretofore
executed and delivered an Indenture, dated as of November 20, 2003 (as amended,
supplemented, waived or otherwise modified, the "Indenture"), providing for the
issuance of a principal amount of up to $150,000,000 of 8% Senior Subordinated
Notes due 2013 of the Company;

          WHEREAS, Section 4.18 of the Indenture provides that the Company is
required to cause Domestic Subsidiaries that are created or acquired after the
date of the Indenture to execute and deliver to the Trustee a Supplemental
Indenture pursuant to which such Subsidiary will fully and unconditionally
guarantee, on a joint and several basis with the other Guarantors, the full and
prompt payment of the Obligations of the Company under the Notes and the
Indenture on a senior subordinated basis, and the performance of all other
obligations of the Company to the Holders and the Trustee all in accordance with
the terms set forth in Article Eleven of the Indenture;

          WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and the Guarantors are authorized to execute and deliver this
Supplemental Indenture to amend the Indenture, without the consent of any
Holder;

          NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the other Guarantors and the Trustee mutually covenant
and agree for the equal and ratable benefit of the Holders of the Notes as
follows:

                                   ARTICLE ONE

                                   DEFINITIONS

          Section 1.1 Defined Terms. As used in this Supplemental Indenture,
terms defined in the Indenture or in the preamble or recital hereto are used
herein as therein defined, except that the term "Holders" in this Supplemental
Indenture shall refer to the term "Holders" as defined in the Indenture and the
Trustee acting on behalf or for the benefit of such holders. The words "herein,"
"hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.

                                      E-1



                                   ARTICLE TWO

                        AGREEMENT TO BE BOUND; GUARANTEE

          Section 2.1 Agreement to be Bound. The New Guarantor hereby becomes a
party to the Indenture as a Guarantor and as such will have all of the rights
and be subject to all of the obligations and agreements of a Guarantor under the
Indenture. The New Guarantor agrees to be bound by all of the provisions of the
Indenture applicable to a Guarantor and to perform all of the obligations and
agreements of a Guarantor under the Indenture.

          Section 2.2 Guarantee. The New Guarantor hereby unconditionally
guarantees, as primary obligor and not merely as surety, jointly and severally
with each other Guarantor, to each Holder of the Notes and the Trustee, the full
and punctual payment when due, whether at maturity, upon redemption or
repurchase, by declaration of acceleration or otherwise, of the obligations
pursuant to Article Eleven of the Indenture and subject to the terms and
conditions of the Indenture.

                                  ARTICLE THREE

                                  MISCELLANEOUS

          Section 3.1 Notices. Any notice or communication by the Company, any
Guarantor or the Trustee to the others is duly given if in writing and delivered
in Person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address.

          If to the Company and/or any Guarantor:

Michael Foods, Inc.
301 Carlson Parkway
Suite 400
Minnetonka, Minnesota 55305
Telecopier No.: [         ]
                 ---------

Attention: John D. Reedy, Executive Vice President and Chief Financial Officer

          With a copy to:

Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
Telecopier No.: (212) 310-8007

                                       E-2



          If to the Trustee:

Wells Fargo Bank Minnesota, National Association
213 Court Street
Suite 703
Middletown, Connecticut 06457
Telecopier No.: (860) 704-6219

Attention: Joseph O'Donnell

          The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

          All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

          Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.

          If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

          If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

          Section 3.2 Ratification of Indenture; Supplemental Indenture Part of
Indenture; Trustee's Disclaimer. Except as expressly amended hereby, the
Indenture is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect. This
Supplemental Indenture shall form a part of the Indenture for all purposes, and
every Holder of Notes heretofore or hereafter authenticated and delivered shall
be bound hereby. The Trustee makes no representation or warranty as to the
validity or sufficiency of this Supplemental Indenture.

          Section 3.3 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, THE INDENTURE,
THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

                                       E-3



          Section 3.4 No Adverse Interpretation of Other Agreements. This
Supplemental Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person (other
than the Indenture). Any such indenture, loan or debt agreement may not be used
to interpret this Supplemental Indenture or the Indenture.

          Section 3.5 Successors. All agreements of the New Guarantor in this
Supplemental Indenture shall bind its successors, except as otherwise provided
in Section 11.05 of the Indenture.

          Section 3.6 Severability. In case any provision in this Supplemental
Indenture, the Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

          Section 3.7 Counterpart Originals. The parties may sign any number of
copies of this Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement.

          Section 3.8 Headings, etc. The Headings of the Articles and Sections
of this Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Supplemental Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.

                                       E-4



          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.

                                        [NEW GUARANTOR],
                                        as a Guarantor


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        MICHAEL FOODS, INC.


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        WELLS FARGO BANK MINNESOTA,
                                        NATIONAL ASSOCIATION, as Trustee


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        [EACH THEN EXISTING GUARANTOR]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                       E-5

EX-4.6

                                                                     EXHIBIT 4.6

                                                                  EXECUTION COPY

                          REGISTRATION RIGHTS AGREEMENT

                                  by and among

                               Michael Foods, Inc.
                 and the Guarantors Listed on Schedule A hereto

                                       and

                         Banc of America Securities LLC
                          Deutsche Bank Securities Inc.
                               UBS Securities LLC

                          Dated as of November 20, 2003



                          REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this "Agreement") is made and entered
into as of November 20, 2003, by and among Michael Foods, Inc., a Delaware
corporation (the "Company"), the subsidiaries of the Company listed on Schedule
A hereto (each a "Guarantor" and, collectively, the "Guarantors"), and Banc of
America Securities LLC, Deutsche Bank Securities Inc. and UBS Securities LLC
(each an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each
of whom has agreed to purchase the Company's 8% Senior Subordinated Notes due
2013 (the "Initial Notes") pursuant to the Purchase Agreement (as defined
below).

     This Agreement is made pursuant to the Purchase Agreement, dated as of
November 6, 2003 (the "Purchase Agreement"), by and among the Company, its
predecessors listed therein, the Guarantors, and the Initial Purchasers (i) for
your benefit and for the benefit of each other Initial Purchaser and (ii) for
the benefit of the holders from time to time of the Notes (including you and
each other Initial Purchaser). In order to induce the Initial Purchasers to
purchase the Initial Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
5(h) of the Purchase Agreement.

     The parties hereby agree as follows:

     Section 1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:

     Additional Interest Payment Date: With respect to the Initial Notes, each
Interest Payment Date.

     Broker-Dealer: Any broker or dealer registered under the Exchange Act.

     Closing Date: The date of this Agreement.

     Commission: The Securities and Exchange Commission.

     Consummate: A registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Exchange Notes to be issued in the Exchange Offer,
(ii) the maintenance of such Registration Statement continuously effective and
the keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture of Exchange Notes in the same
aggregate principal amount as the aggregate principal amount of Initial Notes
that were tendered by Holders thereof pursuant to the Exchange Offer.

     Effectiveness Target Date: As defined in Section 5.

     Exchange Act: The Securities Exchange Act of 1934, as amended.



     Exchange Notes: The 8% Senior Subordinated Notes due 2013, of the same
series under the Indenture as the Initial Notes, to be issued to Holders in
exchange for Transfer Restricted Securities pursuant to this Agreement.

     Exchange Offer: The registration by the Company under the Securities Act of
the Exchange Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.

     Exchange Offer Registration Period: As defined in Section 3 hereof.

     Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.

     Exempt Resales: The transactions in which the Initial Purchasers propose to
sell the Initial Notes to certain "qualified institutional buyers," as such term
is defined in Rule 144A under the Securities Act, and to certain institutional
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Securities Act ("Accredited Institutions").

     Holders: As defined in Section 2(b) hereof.

     Indemnified Holder: As defined in Section 8(a) hereof.

     Indenture: The Indenture, dated as of November 20, 2003, among the Company,
the Guarantors and Wells Fargo Bank Minnesota, National Association, as trustee
(the "Trustee"), pursuant to which the Notes are to be issued, as such Indenture
is amended or supplemented from time to time in accordance with the terms
thereof.

     Initial Notes: The 8% Senior Subordinated Notes due 2013, of the same
series under the Indenture as the Exchange Notes, for so long as such securities
constitute Transfer Restricted Securities.

     Initial Placement: The issuance and sale by the Company of the Initial
Notes to the Initial Purchasers pursuant to the Purchase Agreement.

     Initial Purchaser: As defined in the preamble hereto.

     Interest Payment Date: As defined in the Indenture and the Notes.

     NASD: National Association of Securities Dealers, Inc.

     Notes: The Initial Notes and the Exchange Notes.

     Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.

                                        2



     Prospectus: The prospectus included in a Registration Statement, as amended
or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

     Registration Default: As defined in Section 5 hereof.

     Registration Statement: Any registration statement of the Company relating
to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.

     Requesting Holders: As defined in Section 6 hereof.

     Securities Act: The Securities Act of 1933, as amended.

     Shelf Filing Deadline: As defined in Section 4 hereof.

     Shelf Registration Period: As defined in Section 4 hereof.

     Shelf Registration Statement: As defined in Section 4 hereof.

     Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Securities Act, (b) the date on which
such Note has been effectively registered under the Securities Act and disposed
of in accordance with a Shelf Registration Statement and (c) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Securities
Act or by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by
the Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).

     Trust Indenture Act: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa 77bbbb) as in effect on the date of the Indenture.

     Underwritten Registration or Underwritten Offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.

     Section 2. Securities Subject to this Agreement.

     (a) Transfer Restricted Securities. The securities entitled to the benefits
of this Agreement are the Transfer Restricted Securities.

     (b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.

     Section 3. Registered Exchange Offer.

                                        3



     (a) Unless the Exchange Offer shall not be permissible under applicable law
or Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), the Company and the Guarantors shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 90 days after the Closing Date, a Registration Statement under
the Securities Act relating to the Exchange Notes and the Exchange Offer, (ii)
use their reasonable best efforts to cause such Registration Statement to become
effective at the earliest possible time, but in no event later than 180 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Securities Act and (C) cause all necessary filings in
connection with the registration and qualification of the Exchange Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Registration Statement, commence the Exchange Offer. The Exchange Offer shall be
on the appropriate form permitting registration of the Exchange Notes to be
offered in exchange for the Transfer Restricted Securities and to permit resales
of Notes held by Broker-Dealers as contemplated by Section 3(c) below.

     (b) The Company and the Guarantors shall use their respective reasonable
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 business days after the date notice of the Exchange
Offer is mailed to the Holders. The Company and the Guarantors shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Company and the Guarantors shall use their best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days after the date on which
the Exchange Offer Registration Statement has become effective.

     (c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus forming a part of the Exchange Offer Registration
Statement that any Broker-Dealer who holds Initial Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Initial Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resales of the Exchange Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer
except to the extent required by the Commission as a result of a change in
policy after the date of this Agreement.

                                        4



     The Company and the Guarantors shall use their respective reasonable best
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
Notes acquired by Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities, and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period ending on the earlier of (i) 180 days from the date on which
the Exchange Offer Registration Statement is declared effective and (ii) the
date on which a Broker-Dealer is no longer required to deliver a prospectus in
connection with market-making or other trading activities (the "Exchange Offer
Registration Period")

     The Company shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
180-day (or shorter as provided in the foregoing sentence) period in order to
facilitate such resales.

     (d) The Company and the Guarantors may suspend the use of the Prospectus
for a period not to exceed 45 days to avoid premature public disclosure of a
pending corporate transaction, including pending acquisitions or divestitures of
assets, mergers and combinations and similar events; provided that (i) the
Company and the Guarantors promptly thereafter comply with the requirements of
Section 6(a) and Section 6(c) hereof, as applicable, (ii) the Exchange Offer
Registration Period shall be extended by the number of days during which such
Exchange Offer Registration Statement was not effective or usable pursuant to
the foregoing provisions and (iii) additional interest shall accrue on the Notes
as provided in Section 5 hereof.

     Section 4. Shelf Registration.

     (a) Shelf Registration. If (i) the Company and the Guarantors are not
required to file an Exchange Offer Registration Statement or to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), (ii) for any reason the Exchange Offer is not Consummated
within 30 business days after the date on which the Exchange Offer Registration
Statement has become effective, or (iii) with respect to any Holder of Transfer
Restricted Securities (A) such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) such Holder
may not resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Initial
Notes acquired directly from the Company or one of its affiliates, then, upon
such Holder's request, the Company and the Guarantors shall

          (x) cause to be filed a shelf registration statement pursuant to Rule
     415 under the Securities Act, which may be an amendment to the Exchange
     Offer Registration Statement (in either event, the "Shelf Registration
     Statement") on or prior to 90 days after the obligation to file the Shelf
     Registration Statement arises (such date being the "Shelf Filing
     Deadline"), which Shelf Registration Statement shall provide for resales of
     all Transfer Restricted Securities the Holders of which shall have provided
     the information required pursuant to Section 4(b) hereof; and

                                        5



          (y) use their best efforts to cause such Shelf Registration Statement
     to be declared effective by the Commission on or before the 180th day after
     the obligation to file the Shelf Registration Statement arises.

     The Company and the Guarantors shall use their reasonable best efforts to
keep such Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of at least two years
following the effective date of such Shelf Registration Statement (or shorter
period that will terminate when all the Notes covered by such Shelf Registration
Statement have been sold pursuant to such Shelf Registration Statement) (the
"Shelf Registration Period")

     (b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.

     (c) The Company and the Guarantors may suspend the use of the Prospectus
for a period not to exceed 45 days in any twelve-month period to avoid premature
public disclosure of a pending corporate transaction, including pending
acquisitions or divestitures of assets, mergers and combinations and similar
events; provided that (i) the Company and the Guarantors promptly thereafter
comply with the requirements of Section 6(b) and Section 6(c) hereof, as
applicable, (ii) the Shelf Registration Period shall be extended by the number
of days during which such Shelf Registration Statement was not effective or
usable pursuant to the foregoing provisions and (iii) the additional interest
shall accrue on the Notes as provided in Section 5 hereof.

     Section 5. Additional Interest. If (i) any of the Registration Statements
required by this Agreement is not filed with the Commission on or prior to the
date specified for such filing in this Agreement, (ii) any of such Registration
Statements has not been declared effective by the Commission on or prior to the
date specified for such effectiveness in this Agreement (the "Effectiveness
Target Date"), (iii) the Exchange Offer has not been Consummated within 30
business days after the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement, (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
within five business days by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective or (v) the Company and the Guarantors shall have initiated and/or
maintained a

                                        6



suspension period longer than the periods specified in Section 3(d) or 4(c)
(each such event referred to in clauses (i) through (v), a "Registration
Default"), the Company and the Guarantors hereby jointly and severally agree
that the interest rate borne by the Transfer Restricted Securities shall be
increased by 0.25% per annum during the 90-day period immediately following the
occurrence of any Registration Default and shall increase by 0.25% per annum at
the end of each subsequent 90-day period, but in no event shall such increase
exceed 1.00% per annum. Following the cure of all Registration Defaults relating
to any particular Transfer Restricted Securities, the interest rate borne by the
relevant Transfer Restricted Securities will be reduced to the original interest
rate borne by such Transfer Restricted Securities; provided, however, that, if
after any such reduction in interest rate, a different Registration Default
occurs, the interest rate borne by the relevant Transfer Restricted Securities
shall again be increased pursuant to the foregoing provisions.

     All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Transfer Restricted Security shall have been satisfied in full.

     Section 6. Registration Procedures.

     (a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall comply with all of the provisions of
Section 6(c) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:

          (i) If in the reasonable opinion of counsel to the Company there is a
     question as to whether the Exchange Offer is permitted by applicable law,
     the Company and the Guarantors hereby agree to seek a no-action letter or
     other favorable decision from the Commission allowing the Company and the
     Guarantors to Consummate an Exchange Offer for such Transfer Restricted
     Securities. The Company and the Guarantors each hereby agrees to pursue the
     issuance of such a decision to the Commission staff level but shall not be
     required to take commercially unreasonable action to effect a change of
     Commission policy. The Company and the Guarantors each hereby agrees,
     however, to (A) participate in telephonic conferences with the Commission,
     (B) deliver to the Commission staff an analysis prepared by counsel to the
     Company setting forth the legal bases, if any, upon which such counsel has
     concluded that such an Exchange Offer should be permitted and (C)
     diligently pursue a favorable resolution by the Commission staff of such
     submission.

          (ii) As a condition to its participation in the Exchange Offer
     pursuant to the terms of this Agreement, each Holder of Transfer Restricted
     Securities shall furnish, upon the request of the Company, prior to the
     Consummation thereof, a written representation to the Company (which may be
     contained in the letter of transmittal contemplated by the Exchange Offer
     Registration Statement) to the effect that (A) it is not an affiliate of
     the Company, (B) it is not engaged in, and does not intend to engage in,
     and has no arrangement or understanding with any person to participate in,
     a distribution of the

                                        7



     Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring
     the Exchange Notes in its ordinary course of business. In addition, all
     such Holders of Transfer Restricted Securities shall otherwise cooperate in
     the Company's preparations for the Exchange Offer. Each Holder hereby
     acknowledges and agrees that any Broker-Dealer and any such Holder using
     the Exchange Offer to participate in a distribution of the Exchange Notes
     to be acquired in the Exchange Offer (1) could not under Commission policy
     as in effect on the date of this Agreement rely on the position of the
     Commission enunciated in Morgan Stanley and Co., Inc. (available June 5,
     1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as
     interpreted in the Commission's letter to Shearman & Sterling dated July 2,
     1993, and similar no-action letters (which may include any no-action letter
     obtained pursuant to clause (i) above), and (2) must comply with the
     registration and prospectus delivery requirements of the Securities Act in
     connection with a secondary resale transaction and that such a secondary
     resale transaction should be covered by an effective registration statement
     containing the selling security holder information required by Item 507 or
     508, as applicable, of Regulation S-K if the resales are of Exchange Notes
     obtained by such Holder in exchange for Initial Notes acquired by such
     Holder directly from the Company.

     (b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company and the Guarantors shall comply with all the provisions
of Section 6(c) below and shall use their reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company and the Guarantors will as expeditiously as
possible prepare and file with the Commission a Registration Statement relating
to the registration on any appropriate form under the Securities Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof.

     (c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Company and the Guarantors shall:

          (i) use their best efforts to keep such Registration Statement
     continuously effective and provide all requisite financial statements
     (including, if required by the Securities Act or any regulation thereunder,
     financial statements of the Guarantors) for the period specified in Section
     3 or 4 of this Agreement, as applicable; upon the occurrence of any event
     that would cause any such Registration Statement or the Prospectus
     contained therein (A) to contain an untrue statement of a material fact or
     omit to state a material fact necessary to make the statements therein not
     misleading or (B) not to be effective and usable for resale of Transfer
     Restricted Securities during the period required by this Agreement, the
     Company and the Guarantors shall file promptly an appropriate amendment to
     such Registration Statement, in the case of clause (A), correcting any such
     misstatement or omission, and, in the case of either clause (A) or (B), use
     their best efforts to cause such amendment to be declared effective and
     such Registration Statement and the related Prospectus to become usable for
     their intended purpose(s) as soon as practicable thereafter;

                                        8



          (ii) prepare and file with the Commission such amendments and
     post-effective amendments to the Registration Statement as may be necessary
     to keep the Registration Statement effective for the applicable period set
     forth in Section 3 or 4 hereof, as applicable, or such shorter period as
     will terminate when all Transfer Restricted Securities covered by such
     Registration Statement have been sold; cause the Prospectus to be
     supplemented by any required Prospectus supplement, and as so supplemented
     to be filed pursuant to Rule 424 under the Securities Act, and to comply
     fully with the applicable provisions of Rules 424 and 430A under the
     Securities Act in a timely manner; and comply with the provisions of the
     Securities Act with respect to the disposition of all securities covered by
     such Registration Statement during the applicable period in accordance with
     the intended method or methods of distribution by the sellers thereof set
     forth in such Registration Statement or supplement to the Prospectus;

          (iii) advise the underwriter(s), if any, and selling Holders promptly
     and, if requested by such Persons, to confirm such advice in writing, (A)
     when the Prospectus or any Prospectus supplement or post-effective
     amendment has been filed, and, with respect to any Registration Statement
     or any post-effective amendment thereto, when the same has become
     effective, (B) of any request by the Commission for amendments to the
     Registration Statement or amendments or supplements to the Prospectus or
     for additional information relating thereto, (C) of the issuance by the
     Commission of any stop order suspending the effectiveness of the
     Registration Statement under the Securities Act or of the suspension by any
     state securities commission of the qualification of the Transfer Restricted
     Securities for offering or sale in any jurisdiction, or the initiation of
     any proceeding for any of the preceding purposes, and (D) of the existence
     of any fact or the happening of any event that makes any statement of a
     material fact made in the Registration Statement, the Prospectus, any
     amendment or supplement thereto, or any document incorporated by reference
     therein untrue, or that requires the making of any additions to or changes
     in the Registration Statement or the Prospectus in order to make the
     statements therein not misleading. If at any time the Commission shall
     issue any stop order suspending the effectiveness of the Registration
     Statement, or any state securities commission or other regulatory authority
     shall issue an order suspending the qualification or exemption from
     qualification of the Transfer Restricted Securities under state securities
     or Blue Sky laws, the Company and the Guarantors shall use their best
     efforts to obtain the withdrawal or lifting of such order at the earliest
     possible time;

          (iv) furnish without charge to each of the Initial Purchasers, each
     selling Holder named in any Registration Statement, and each of the
     underwriter(s), if any, before filing with the Commission, copies of any
     Registration Statement or any Prospectus included therein or any amendments
     or supplements to any such Registration Statement or Prospectus (including
     all documents incorporated by reference after the initial filing of such
     Registration Statement), which documents will be subject to the review of
     such Holders and underwriter(s) in connection with such sale, if any, for a
     period of at least five business days, and the Company will not file any
     such Registration Statement or Prospectus or any amendment or supplement to
     any such Registration Statement or Prospectus (including all such documents
     incorporated by reference) to which an Initial Purchaser of Transfer
     Restricted Securities covered by such Registration Statement or the
     underwriter(s), if any, shall reasonably object in writing within five
     business days after

                                        9



     the receipt thereof (such objection to be deemed timely made upon
     confirmation of telecopy transmission within such period). The objection of
     an Initial Purchaser or underwriter, if any, shall be deemed to be
     reasonable if such Registration Statement, amendment, Prospectus or
     supplement, as applicable, as proposed to be filed, contains an untrue
     statement of a material fact or omits to state a material fact necessary to
     make the statement therein not misleading;

          (v) promptly prior to the filing of any document that is to be
     incorporated by reference into a Registration Statement or Prospectus,
     provide copies of such document to the Initial Purchasers, each selling
     Holder named in any Registration Statement, and to the underwriter(s), if
     any, make the representatives of the Company and Guarantors available for
     discussion of such document and other customary due diligence matters, and
     include such information in such document prior to the filing thereof as
     such selling Holders or underwriter(s), if any, reasonably may request;

          (vi) make available at reasonable times for inspection by the Initial
     Purchasers, any managing underwriter participating in any disposition
     pursuant to such Registration Statement and any attorney or accountant
     retained by such Initial Purchasers or any of the underwriter(s), all
     financial and other records, pertinent corporate documents and properties
     of the Company and the Guarantors and cause the Company's and the
     Guarantors' officers, directors and employees to supply all information
     reasonably requested by any such Holder, underwriter, attorney or
     accountant in connection with such Registration Statement subsequent to the
     filing thereof and prior to its effectiveness;

          (vii) if requested by any selling Holders or the underwriter(s), if
     any, promptly incorporate in any Registration Statement or Prospectus,
     pursuant to a supplement or post-effective amendment if necessary, such
     information as such selling Holders and underwriter(s), if any, may
     reasonably request to have included therein, including, without limitation,
     information relating to the "Plan of Distribution" of the Transfer
     Restricted Securities, information with respect to the principal amount of
     Transfer Restricted Securities being sold to such underwriter(s), the
     purchase price being paid therefor and any other terms of the offering of
     the Transfer Restricted Securities to be sold in such offering; and make
     all required filings of such Prospectus supplement or post-effective
     amendment as soon as practicable after the Company is notified of the
     matters to be incorporated in such Prospectus supplement or post-effective
     amendment;

          (viii) cause the Transfer Restricted Securities covered by the
     Registration Statement to be rated with the appropriate rating agencies, if
     so requested by the Holders of a majority in aggregate principal amount of
     Notes covered thereby or the underwriter(s), if any;

          (ix) furnish to each selling Holder and each of the underwriter(s), if
     any, without charge, at least one copy of the Registration Statement, as
     first filed with the Commission, and of each amendment thereto, including
     financial statements and schedules, all documents incorporated by reference
     therein and all exhibits (including exhibits incorporated therein by
     reference);

                                       10



          (x) deliver to each selling Holder and each of the underwriter(s), if
     any, without charge, as many copies of the Prospectus (including each
     preliminary prospectus) and any amendment or supplement thereto as such
     Persons reasonably may request; the Company and the Guarantors hereby
     consent to the use of the Prospectus and any amendment or supplement
     thereto by each of the selling Holders and each of the underwriter(s), if
     any, in connection with the offering and the sale of the Transfer
     Restricted Securities covered by the Prospectus or any amendment or
     supplement thereto;

          (xi) upon request of any Holders who collectively hold an aggregate
     principal amount of Notes in excess of 20% of the Transferred Restricted
     Securities (the "Requesting Holders") enter into, and cause the Guarantors
     to enter into, such agreements (including an underwriting agreement), and
     make, and cause the Guarantors to make, such representations and
     warranties, and take all such other actions in connection therewith, in
     order to expedite or facilitate the disposition of the Transfer Restricted
     Securities pursuant to any Registration Statement contemplated by this
     Agreement, all to such extent as may be requested by any Initial Purchaser
     or by any Requesting Holders of Transfer Restricted Securities or
     underwriter in connection with any sale or resale pursuant to any
     Registration Statement contemplated by this Agreement; and whether or not
     an underwriting agreement is entered into and whether or not the
     registration is an Underwritten Registration, the Company and the
     Guarantors shall:

               (A) furnish to each Initial Purchaser, each selling Holder and
          each underwriter, if any, in such substance and scope as they may
          request and as are customarily made by issuers to underwriters in
          primary underwritten offerings, upon the date of the Consummation of
          the Exchange Offer and, if applicable, the effectiveness of the Shelf
          Registration Statement:

                    (1) a certificate, dated the date of Consummation of the
               Exchange Offer or the date of effectiveness of the Shelf
               Registration Statement, as the case may be, signed by (y) the
               President or any Vice President and (z) a principal financial or
               accounting officer of each of the Company and the Guarantors,
               confirming, as of the date thereof, the matters set forth in
               paragraphs (i), (iii) and (iv) of Section 5 (e) (to the extent
               that such paragraphs reference the Surviving Corporation) of the
               Purchase Agreement and such other matters as such parties may
               reasonably request;

                    (2) an opinion, dated the date of Consummation of the
               Exchange Offer or the date of effectiveness of the Shelf
               Registration Statement, as the case may be, of counsel for the
               Company and the Guarantors, covering the matters set forth in
               paragraph (c) of Section 5 of the Purchase Agreement and such
               other matter as such parties may reasonably request, and in any
               event including a statement to the effect that such counsel has
               participated in conferences with officers and other
               representatives of the Company and the Guarantors,
               representatives of the independent public accountants for the
               Company and the Guarantors, the Initial Purchasers'
               representatives and the Initial Purchasers' counsel in connection
               with the preparation of such Registration Statement and the
               related Prospectus and

                                       11



               have considered the matters required to be stated therein and the
               statements contained therein, although such counsel has not
               independently verified the accuracy, completeness or fairness of
               such statements; and that such counsel advises that, on the basis
               of the foregoing (relying as to materiality to a large extent
               upon facts provided to such counsel by officers and other
               representatives of the Company and the Guarantors and without
               independent check or verification), no facts came to such
               counsel's attention that caused such counsel to believe that the
               applicable Registration Statement, at the time such Registration
               Statement or any post-effective amendment thereto became
               effective, and, in the case of the Exchange Offer Registration
               Statement, as of the date of Consummation, contained an untrue
               statement of a material fact or omitted to state a material fact
               required to be stated therein or necessary to make the statements
               therein not misleading, or that the Prospectus contained in such
               Registration Statement as of its date and, in the case of the
               opinion dated the date of Consummation of the Exchange Offer, as
               of the date of Consummation, contained an untrue statement of a
               material fact or omitted to state a material fact necessary in
               order to make the statements therein, in light of the
               circumstances under which they were made, not misleading. Without
               limiting the foregoing, such counsel may state further that such
               counsel assumes no responsibility for, and has not independently
               verified, the accuracy, completeness or fairness of the financial
               statements, notes and schedules and other financial or
               statistical data derived from financial statements included in
               any Registration Statement contemplated by this Agreement or the
               related Prospectus; and

                    (3) in connection with any Underwritten Registration or
               Underwritten Offering, a customary comfort letter, dated as of
               the date of Consummation of the Exchange Offer or the date of
               effectiveness of the Shelf Registration Statement, as the case
               may be, from the Company's independent accountants, in the
               customary form and covering matters of the type customarily
               covered in comfort letters by underwriters in connection with
               primary underwritten offerings, and affirming the matters set
               forth in the comfort letters delivered pursuant to Section 5(a)
               of the Purchase Agreement, without exception;

               (B) set forth in full or incorporate by reference in the
          underwriting agreement, if any, the indemnification provisions and
          procedures of Section 8 hereof with respect to all parties to be
          indemnified pursuant to said Section; and

               (C) deliver such other documents and certificates as may be
          reasonably requested by such parties to evidence compliance with
          clause (A) above and with any customary conditions contained in the
          underwriting agreement or other agreement entered into by the Company
          or the Guarantors pursuant to this clause (xi), if any.

                                       12



          If at any time the representations and warranties of the Company and
     the Guarantors contemplated in clause (A)(1) above cease to be true and
     correct, the Company or the Guarantors shall so advise the Initial
     Purchasers and the underwriter(s), if any, and each selling Holder promptly
     and, if requested by such Persons, shall confirm such advice in writing;

          (xii) prior to any public offering of Transfer Restricted Securities,
     cooperate with, and cause the Guarantors to cooperate with, the selling
     Holders, the underwriter(s), if any, and their respective counsel in
     connection with the registration and qualification of the Transfer
     Restricted Securities under the securities or Blue Sky laws of such
     jurisdictions as the selling Holders or underwriter(s) may request and do
     any and all other acts or things necessary or advisable to enable the
     disposition in such jurisdictions of the Transfer Restricted Securities
     covered by the Shelf Registration Statement; provided, however, that
     neither the Company nor the Guarantors shall be required to register or
     qualify as a foreign corporation where it is not then so qualified or to
     take any action that would subject it to the service of process in suits or
     to taxation, other than as to matters and transactions relating to the
     Registration Statement, in any jurisdiction where it is not then so
     subject;

          (xiii) shall issue, upon the request of any Holder of Transfer
     Restricted Securities covered by the Shelf Registration Statement, Exchange
     Notes, having an aggregate principal amount equal to the aggregate
     principal amount of Transfer Restricted Securities surrendered to the
     Company by such Holder in exchange therefor or being sold by such Holder;
     such Exchange Notes to be registered in the name of such Holder or in the
     name of the purchaser(s) of such Notes, as the case may be; in return, the
     Transfer Restricted Securities held by such Holder shall be surrendered to
     the Company for cancellation;

          (xiv) cooperate with, and cause the Guarantors to cooperate with, the
     selling Holders and the underwriter(s), if any, to facilitate the timely
     preparation and delivery of certificates representing Transfer Restricted
     Securities to be sold and not bearing any restrictive legends; and enable
     such Transfer Restricted Securities to be in such denominations and
     registered in such names as the Holders or the underwriter(s), if any, may
     request at least two business days prior to any sale of Transfer Restricted
     Securities made by such underwriter(s);

          (xv) use its best efforts to cause the Transfer Restricted Securities
     covered by the Registration Statement to be registered with or approved by
     such other governmental agencies or authorities as may be necessary to
     enable the seller or sellers thereof or the underwriter(s), if any, to
     consummate the disposition of such Transfer Restricted Securities, subject
     to the proviso contained in clause (xii) above;

          (xvi) if any fact or event contemplated by clause (c)(iii)(D) above
     shall exist or have occurred, prepare a supplement or post-effective
     amendment to the Registration Statement or related Prospectus or any
     document incorporated therein by reference or file any other required
     document so that, as thereafter delivered to the purchasers of Transfer
     Restricted Securities, the Prospectus will not contain an untrue statement
     of a material

                                       13



     fact or omit to state any material fact necessary to make the statements
     therein not misleading;

          (xvii) provide a CUSIP number for all Transfer Restricted Securities
     not later than the effective date of the Registration Statement and provide
     the Trustee under the Indenture with printed certificates for the Transfer
     Restricted Securities which are in a form eligible for deposit with the
     Depositary Trust Company;

          (xviii) cooperate and assist in any filings required to be made with
     the NASD and in the performance of any due diligence investigation by any
     underwriter (including any "qualified independent underwriter") that is
     required to be retained in accordance with the rules and regulations of the
     NASD, and use its reasonable best efforts to cause such Registration
     Statement to become effective and approved by such governmental agencies or
     authorities as may be necessary to enable the Holders selling Transfer
     Restricted Securities to consummate the disposition of such Transfer
     Restricted Securities;

          (xix) otherwise use its reasonable best efforts to comply with all
     applicable rules and regulations of the Commission, and make generally
     available to its security holders, as soon as practicable, a consolidated
     earnings statement meeting the requirements of Rule 158 (which need not be
     audited) for the twelve-month period (A) commencing at the end of any
     fiscal quarter in which Transfer Restricted Securities are sold to
     underwriters in a firm or best efforts Underwritten Offering or (B) if not
     sold to underwriters in such an offering, beginning with the first month of
     the Company's first fiscal quarter commencing after the effective date of
     the Registration Statement;

          (xx) cause the Indenture to be qualified under the Trust Indenture Act
     not later than the effective date of the first Registration Statement
     required by this Agreement, and, in connection therewith, cooperate with,
     and cause the Guarantors to cooperate with, the Trustee and the Holders of
     Notes to effect such changes to the Indenture as may be required for such
     Indenture to be so qualified in accordance with the terms of the Trust
     Indenture Act; and to execute, and cause the Guarantors to execute, and use
     its best efforts to cause the Trustee to execute, all documents that may be
     required to effect such changes and all other forms and documents required
     to be filed with the Commission to enable such Indenture to be so qualified
     in a timely manner;

          (xxi) cause all Transfer Restricted Securities covered by the
     Registration Statement to be listed on each securities exchange on which
     similar securities issued by the Company are then listed if requested by
     the Holders of a majority in aggregate principal amount of such Transfer
     Restricted Securities covered by the Registration Statement or the managing
     underwriter(s), if any; and

          (xxii) provide promptly to each Holder upon request each document
     filed with the Commission pursuant to the requirements of Section 13 and
     Section 15 of the Exchange Act.

     Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section

                                       14



6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Company,
each Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including
the date when each selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 6(c)(xvi) hereof or shall have received the Advice; however, no such
extension shall be taken into account in determining whether Additional Interest
is due pursuant to Section 5 hereof or the amount of such Additional Interest,
it being agreed that the Company's option to suspend use of a Registration
Statement pursuant to this paragraph for periods longer than those permitted in
Section 3(d) or 4(c), as applicable, shall be treated as a Registration Default
for purposes of Section 5.

     Section 7. Registration Expenses.

     (a) All expenses incident to the Company's or the Guarantors' performance
of or compliance with this Agreement will be borne by the Company and the
Guarantors, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including filings made by any Initial Purchaser or Holder with the NASD (and,
if applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the Exchange Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company, the Guarantors and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the Exchange
Notes on a national securities exchange or automated quotation system pursuant
to the requirements thereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).

     The Company and the Guarantors will, in any event, bear their internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or any Guarantor.

     (b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf

                                       15



Registration Statement), the Company and the Guarantors will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Shearman & Sterling LLP or such other counsel as may be chosen by the Holders of
a majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.

     Section 8. Indemnification.

     (a) The Company and each of the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act) any Holder (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling person") and (iii)
the respective officers, directors, partners, employees, representatives and
agents of any Holder or any controlling person (any person referred to in clause
(i), (ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"),
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgments, actions and expenses (including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing, settling, compromising, paying or defending
any claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees and
expenses of counsel to any Indemnified Holder), joint or several, directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (or any amendment or
supplement thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by an untrue statement or omission or alleged
untrue statement or omission that is made in reliance upon and in conformity
with information relating to any of the Holders furnished in writing to the
Company by any of the Holders expressly for use therein. This indemnity
agreement shall be in addition to any liability which the Company and the
Guarantors may otherwise have.

     In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company and the
Guarantors in writing (provided, that the failure to give such notice shall not
relieve the Company or the Guarantors of their respective obligations pursuant
to this Agreement). Such Indemnified Holder shall have the right to employ its
own counsel in any such action and the fees and expenses of such counsel shall
be paid, as incurred, by the Company and the Guarantors (regardless of whether
it is ultimately determined that an Indemnified Holder is not entitled to
indemnification hereunder). The Company and the Guarantors shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of

                                       16



attorneys (in addition to any local counsel) at any time for such Indemnified
Holders, which firm shall be designated by the Holders. The Company and the
Guarantors shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company and the Guarantors agree to indemnify and
hold harmless any Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected with the
written consent of the Company. The Company and the Guarantors shall not,
without the prior written consent of each Indemnified Holder, settle or
compromise or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.

     (b) Each Holder of Transfer Restricted Securities agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors and their
respective directors, officers of the Company who sign a Registration Statement,
and any person controlling (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) the Company, and the respective
officers, directors, partners, employees, representatives and agents of each
such person, to the same extent as the foregoing indemnity from the Company and
the Guarantors to each of the Indemnified Holders, but only with respect to
claims and actions based on information relating to such Holder furnished in
writing by such Holder expressly for use in any Registration Statement. In case
any action or proceeding shall be brought against the Company or its directors
or officers or any such controlling person in respect of which indemnity may be
sought against a Holder of Transfer Restricted Securities, such Holder shall
have the rights and duties given the Company and the Company or its directors or
officers or such controlling person shall have the rights and duties given to
each Holder by the preceding paragraph.

     (c) If the indemnification provided for in this Section 8 is unavailable to
an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities, judgments, actions or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Guarantors on the one hand, and the Holders on
the other hand, from the Initial Placement (which in the case of the Company
shall be deemed to be equal to the total gross proceeds from the Initial
Placement as set forth on the cover page of the Offering Memorandum), the amount
of Additional Interest which did not become payable as a result of the filing of
the Registration Statement resulting in such losses, claims, damages,
liabilities, judgments actions or expenses, and such Registration Statement, or
if such allocation is not permitted by applicable law, the relative fault of the
Company and the Guarantors on the one hand, and of the Indemnified Holder on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Guarantors on the one hand, and of the Indemnified Holder on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged

                                       17



untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Guarantors
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.

     The Company, each Guarantor and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, none of the Holders (and its related Indemnified
Holders) shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total discount received by such Holder with respect
to the Initial Notes exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
this Section 8(c) are several in proportion to the respective principal amount
of Initial Notes held by each of the Holders hereunder and not joint.

     Section 9. Rule 144A. The Company and the Guarantors each hereby agrees
with each Holder, for so long as any Transfer Restricted Securities remain
outstanding, to make available to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchaser of such Transfer Restricted Securities from such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.

     Section 10. Participation In Underwritten Registrations. No Holder may
participate in any Underwritten Registration hereunder unless such Holder (a)
agrees to sell such Holder's Transfer Restricted Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements.

     Section 11. Selection Of Underwriters. The Holders of Transfer Restricted
Securities covered by the Shelf Registration Statement who desire to do so may
sell such Transfer Restricted Securities in an Underwritten Offering. In any
such Underwritten Offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of the

                                       18



Transfer Restricted Securities included in such offering; provided, that such
investment bankers and managers must be reasonably satisfactory to the Company.

     Section 12. Miscellaneous.

     (a) Remedies. The Company and the Guarantors each hereby agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agree to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

     (b) No Inconsistent Agreements. The Company will not, and will cause the
Guarantors not to, on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any Guarantor has entered into any
agreement granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.

     (c) Adjustments Affecting the Notes. Neither the Company nor any Guarantor
will take any action, or permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.

     (d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered; provided that, with
respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser with respect to which such amendment, qualification,
supplement, waiver, consent or departure is to be effective.

     (e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

          (i)  if to a Holder, at the address set forth on the records of the
               Registrar under the Indenture, with a copy to the Registrar under
               the Indenture; and

          (ii) if to the Initial Purchasers:

               Banc of America Securities LLC

                                       19



               9 West 57th Street
               New York, NY  10019
               Facsimile: 212-583-8567
               Attention: Legal Department

          (iii) if to the Company:

               Michael Foods, Inc.
               c/o Thomas H. Lee Partners, L.P.
               75 State Street
               Boston, MA 02109
               Facsimile: 617-227-3514
               Attention: Kent Weldon

               With a copy to:

               Weil, Gotshal & Manges, LLP
               757 Fifth Avenue
               New York, NY 10153
               Facsimile: 212-810-8007
               Attention: Todd R. Chandler

     All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.

     Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

     (f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.

     (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

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

                                       20



     (j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

     (k) Entire Agreement. This Agreement, together with the Purchase Agreement,
the Notes, the DTC Letter of Representations (as defined in the Purchase
Agreement) and the Indenture, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company and the Guarantors with respect
to the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                                       21



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

                            MICHAEL FOODS, INC.


                            By: /s/ Gregg A. Ostrander
                                ------------------------------------------------
                                Name: Gregg A. Ostrander
                                Title: Chief Executive Officer & President


                            CRYSTAL FARMS REFRIGERATED
                            DISTRIBUTION COMPANY


                            By: /s/ James D. Clarkson
                                ------------------------------------------------
                                Name: James D. Clarkson
                                Title: President


                            NORTHERN STAR CO.


                            By: /s/ James D. Clarkson
                                ------------------------------------------------
                                Name: James D. Clarkson
                                Title: President


                            KMS DAIRY, INC.


                            By: /s/ James D. Clarkson
                                ------------------------------------------------
                                Name: James D. Clarkson
                                Title: President

                                       22



                            M. G. WALDBAUM COMPANY


                            By: /s/  Bill L. Goucher
                                ------------------------------------------------
                                Name: Bill L. Goucher
                                Title: President


                            PAPETTI ELECTROHEATING CORPORATION


                            By: /s/ Bill L. Goucher
                                ------------------------------------------------
                                Name: Bill L. Goucher
                                Title: President


                            PAPETTI'S HYGRADE EGG PRODUCTS, INC.


                            By: /s/ Bill L. Goucher
                                ------------------------------------------------
                                Name: Bill L. Goucher
                                Title: President


                            CASA TRUCKING, INC.


                            By: /s/ Gregg A. Ostrander
                                ------------------------------------------------
                                Name: Gregg A. Ostrander
                                Title: Chief Executive Officer & President

                                       23



                            WISCO FARM COOPERATIVE


                            By: /s/ John D. Reedy
                                ------------------------------------------------
                                Name: John D. Reedy
                                Title: Vice President - Finance


                            WFC, INC.


                            By: /s/ John D. Reedy
                                ------------------------------------------------
                                Name: John D. Reedy
                                Title: Vice President - Finance


                            FARM FRESH FOODS, INC.


                            By: /s/ James D. Clarkson
                                ------------------------------------------------
                                Name: James D. Clarkson
                                Title: President


                            MICHAEL FOODS OF DELAWARE, INC.


                            By: /s/ Gregg A. Ostrander
                                ------------------------------------------------
                                Name: Gregg A. Ostrander
                                Title: Chief Executive Officer & President

                                       24



                            MINNESOTA PRODUCTS, INC.


                            By: /s/ James D. Clarkson
                                ------------------------------------------------
                                Name: James D. Clarkson
                                Title: President

                                       25



     The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written:

BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
UBS SECURITIES LLC

By: Banc of America Securities LLC


By: /s/  Douglas Ingram
    --------------------------------
    Name: Douglas Ingram
    Title: Principal

                                       26



                                                                      SCHEDULE A
                                   GUARANTORS

                                                                 Jurisdiction of
Guarantor                                                         Organization
- ---------                                                        ---------------
Crystal Farms Refrigerated Distribution                          Minnesota
Company

Northern Star Co.                                                Minnesota

KMS Dairy, Inc.                                                  Minnesota

M. G. Waldbaum Company                                           Nebraska

Papetti Electroheating Corporation                               New Jersey

Papetti's Hygrade Egg Products, Inc.                             Minnesota

Casa Trucking, Inc.                                              Minnesota

Wisco Farm Cooperative                                           Wisconsin

WFC, Inc.                                                        Wisconsin

Farm Fresh Foods, Inc.                                           Nevada

Michael Foods of Delaware, Inc.                                  Delaware

Minnesota Products, Inc.                                         Minnesota

                                       27

EX-10.1

                                                                    EXHIBIT 10.1

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

                                CREDIT AGREEMENT

                          Dated as of November 20, 2003

                                      among

                             THL FOOD PRODUCTS CO.,

                                as the Borrower,

                         THL FOOD PRODUCTS HOLDING CO.,

                             BANK OF AMERICA, N.A.,
                   as Administrative Agent, Swing Line Lender
                                       and
                                   L/C Issuer,

                         The Other Lenders Party Hereto,

                       BANC OF AMERICA SECURITIES LLC and

                         DEUTSCHE BANK SECURITIES INC.,

                as Joint Lead Arrangers and Joint Book Managers,

                        DEUTSCHE BANK SECURITIES INC. and

                               UBS SECURITIES LLC,

                            as Co-Syndication Agents,

                                       and

                    GENERAL ELECTRIC CAPITAL CORPORATION and

             COOPERATIVE CENTRALE RAIFFEISEN - BOERENLEENBANK B.A.,
                   "RABOBANK INTERNATIONAL," NEW YORK BRANCH,

                           as Co-Documentation Agents

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



                                TABLE OF CONTENTS

Section                                                                     Page
- -------                                                                     ----

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

1.01   Defined Terms...........................................................1
1.02   Other Interpretive Provisions..........................................37
1.03   Accounting Terms.......................................................38
1.04   Rounding...............................................................38
1.05   References to Agreements and Laws......................................38
1.06   Times of Day...........................................................39
1.07   Timing of Payment or Performance.......................................39
1.08   Currency Equivalents Generally.........................................39

                                     ARTICLE II
                        THE COMMITMENTS AND CREDIT EXTENSIONS

2.01   The Loans..............................................................39
2.02   Borrowings, Conversions and Continuations of Loans.....................40
2.03   Letters of Credit......................................................41
2.04   Swing Line Loans.......................................................49
2.05   Prepayments............................................................51
2.06   Termination or Reduction of Commitments................................54
2.07   Repayment of Loans.....................................................55
2.08   Interest...............................................................56
2.09   Fees...................................................................57
2.10   Computation of Interest and Fees.......................................57
2.11   Evidence of Indebtedness...............................................58
2.12   Payments Generally.....................................................58
2.13   Sharing of Payments....................................................60
2.14   Increase in Term Commitments...........................................61
2.15   Increase in Revolving Credit Commitments...............................62

                                   ARTICLE III
                TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

3.01   Taxes..................................................................63
3.02   Illegality.............................................................65
3.03   Inability to Determine Rates...........................................66
3.04   Increased Cost and Reduced Return; Capital Adequacy; Reserves on
          Eurodollar Rate Loans...............................................66
3.05   Funding Losses.........................................................67
3.06   Matters Applicable to All Requests for Compensation....................68
3.07   Replacement of Lenders under Certain Circumstances.....................69
3.08   Survival...............................................................70



                                   ARTICLE IV
                    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01   Conditions of Initial Credit Extension.................................70
4.02   Conditions to All Credit Extensions....................................73

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

5.01   Existence, Qualification and Power; Compliance with Laws...............74
5.02   Authorization; No Contravention........................................74
5.03   Governmental Authorization; Other Consents.............................75
5.04   Binding Effect.........................................................75
5.05   Financial Statements; No Material Adverse Effect.......................75
5.06   Litigation.............................................................76
5.07   No Default.............................................................77
5.08   Ownership of Property; Liens...........................................77
5.09   Environmental Compliance...............................................77
5.10   Insurance..............................................................78
5.11   Taxes..................................................................78
5.12   ERISA Compliance.......................................................78
5.13   Subsidiaries; Equity Interests.........................................79
5.14   Margin Regulations; Investment Company Act;
          Public Utility Holding Company Act..................................79
5.15   Disclosure.............................................................79
5.16   Compliance with Laws...................................................80
5.17   Intellectual Property; Licenses, Etc...................................80
5.18   Solvency...............................................................80
5.19   Casualty, Etc..........................................................80
5.20   Perfection, Etc........................................................80
5.21   Tax Shelter Regulations................................................81

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

6.01   Financial Statements...................................................81
6.02   Certificates; Other Information........................................82
6.03   Notices................................................................84
6.04   Payment of Obligations.................................................84
6.05   Preservation of Existence, Etc.........................................85
6.06   Maintenance of Properties..............................................85
6.07   Maintenance of Insurance...............................................85
6.08   Compliance with Laws...................................................85
6.09   Books and Records......................................................85
6.10   Inspection Rights......................................................85
6.11   Use of Proceeds........................................................86
6.12   Covenant to Guarantee Obligations and Give Security....................86
6.13   Compliance with Environmental Laws.....................................88

                                       ii



6.14   Further Assurances.....................................................88
6.15   Interest Rate Hedging..................................................89

                                   ARTICLE VII
                               NEGATIVE COVENANTS

7.01   Liens..................................................................89
7.02   Investments............................................................92
7.03   Indebtedness...........................................................94
7.04   Fundamental Changes....................................................97
7.05   Dispositions...........................................................98
7.06   Restricted Payments...................................................100
7.07   Change in Nature of Business..........................................101
7.08   Transactions with Affiliates..........................................102
7.09   Burdensome Agreements.................................................102
7.10   Use of Proceeds.......................................................102
7.11   Financial Covenants...................................................102
7.12   Amendments of Organization Documents..................................103
7.13   Accounting Changes....................................................103
7.14   Prepayments, Etc. of Indebtedness.....................................103
7.15   Amendment of Merger Agreement.........................................104
7.16   Equity Interests of the Borrower and Subsidiaries.....................104
7.17   Holding Company.......................................................104
7.18   Designated Senior Debt................................................104

                                  ARTICLE VIII
                         EVENTS OF DEFAULT AND REMEDIES

8.01   Events of Default.....................................................104
8.02   Remedies Upon Event of Default........................................107
8.03   Application of Funds..................................................107

                                   ARTICLE IX
                      ADMINISTRATIVE AGENT AND OTHER AGENTS

9.01   Appointment and Authorization of Agents...............................108
9.02   Delegation of Duties..................................................109
9.03   Liability of Agents...................................................109
9.04   Reliance by Agents....................................................110
9.05   Notice of Default.....................................................110
9.06   Credit Decision; Disclosure of Information by Agents..................110
9.07   Indemnification of Agents.............................................111
9.08   Agents in their Individual Capacities.................................111
9.09   Successor Agents......................................................112
9.10   Administrative Agent May File Proofs of Claim.........................113
9.11   Collateral and Guaranty Matters.......................................113
9.12   Other Agents; Arrangers and Managers..................................114

                                       iii



9.13    Appointment of Supplemental Administrative Agents....................114

                                    ARTICLE X
                                  MISCELLANEOUS

10.01   Amendments, Etc .....................................................115
10.02   Notices and Other Communications; Facsimile Copies...................117
10.03   No Waiver; Cumulative Remedies.......................................118
10.04   Attorney Costs, Expenses and Taxes...................................118
10.05   Indemnification by the Borrower......................................118
10.06   Payments Set Aside ..................................................119
10.07   Successors and Assigns...............................................120
10.08   Confidentiality .....................................................123
10.09   Setoff ..............................................................124
10.10   Interest Rate Limitation.............................................124
10.11   Counterparts ........................................................125
10.12   Integration .........................................................125
10.13   Survival of Representations and Warranties...........................125
10.14   Severability ........................................................125
10.15   Tax Forms ...........................................................126
10.16   Governing Law .......................................................127
10.17   Waiver of Right to Trial by Jury.....................................128
10.18   Binding Effect ......................................................128

SIGNATURES...................................................................S-1

                                       iv



SCHEDULES

  I         Guarantors
  1.01      Real Properties
  2.01      Commitments and Pro Rata Shares
  5.05      Supplement to Interim Financial Statements
  5.08(b)   Owned Real Property
  5.08(c)   Leased Real Property
  5.08(d)   Other Locations of Tangible Personal Property
  5.09      Environmental Matters
  5.13      Subsidiaries and Other Equity Investments
  5.17      Intellectual Property Matters
  7.01      Existing Liens
  7.02      Existing Investments
  7.03      Existing Indebtedness
  10.02     Administrative Agent's Office, Certain Addresses for Notices

EXHIBITS

  Form of

  A        Committed Loan Notice
  B        Swing Line Loan Notice
  C-1      Term Note
  C-2      Revolving Credit Note
  D        Compliance Certificate
  E        Assignment and Assumption
  F-1      Parent Guaranty
  F-2      Subsidiary Guaranty
  G        Security Agreement
  H        Mortgage
  I        Intellectual Property Security Agreement
  J-1      Opinion Matters - Counsel to Loan Parties
  J-2      Opinion Matters - Local Counsel to Loan Parties
  J-3      Opinion Matters - Local Counsel to Loan Parties (Mortgages)
  K        Assumption Agreement

                                        v



                                CREDIT AGREEMENT

          This CREDIT AGREEMENT ("Agreement") is entered into as of November 20,
2003, among THL FOOD PRODUCTS CO., a Delaware corporation (the "Company", and
together with the Surviving Corporation (as hereinafter defined), the
"Borrower"), THL FOOD PRODUCTS HOLDING CO., a Delaware corporation ("Holdings"),
each lender from time to time party hereto (collectively, the "Lenders" and
individually, a "Lender"), DEUTSCHE BANK SECURITIES INC. and UBS SECURITIES LLC,
as Co-Syndication Agents, GENERAL ELECTRIC CAPITAL CORPORATION and COOPERATIVE
CENTRALE RAIFFEISEN - BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL," NEW YORK
BRANCH, as Co-Documentation Agents, and BANK OF AMERICA, N.A., as Administrative
Agent, Swing Line Lender and L/C Issuer.

                             PRELIMINARY STATEMENTS

          The Company was organized by Holdings to acquire (the "Acquisition")
all of the Equity Interests of M-Foods Holdings, Inc., a Delaware corporation
(the "Target Company").

          Pursuant to the Agreement and Plan of Merger dated as of October 10,
2003 (the "Merger Agreement") between Holdings, the Company, M-Foods Investors,
LLC, the Target Company, and certain other stockholders of the Target Company,
the Company agreed to merge (the "First Merger") with and into the Target
Company with the Target Company being the surviving corporation (the "Surviving
Corporation") in order to effect the Acquisition and, in connection therewith,
Michael Foods, Inc., a Minnesota corporation and wholly-owned direct subsidiary
of the Target Company ("MFI"), agreed to merge (the "Second Merger", and
together with the First Merger, the "Mergers") with and into the Surviving
Corporation with the Surviving Corporation being the surviving entity.
Thereafter, the Surviving Corporation shall change its name to Michael Foods,
Inc., a Delaware corporation.

          The Company has requested that (a) simultaneously with the
consummation of the First Merger, the Lenders make Term Loans to the Company in
an aggregate amount of $495,000,000 to pay, among other things, the cash
consideration for the Acquisition and the First Merger and (b) from time to
time, the Lenders lend to the Borrower and the L/C Issuer (as hereinafter
defined) issue Letters of Credit (as hereinafter defined) for the account of the
Borrower under a $100,000,000 revolving credit facility for the Borrower and its
Subsidiaries.

          The Lenders have indicated their willingness to lend and the L/C
Issuer has indicated its willingness to so issue Letters of Credit, in each
case, on the terms and subject to the conditions set forth herein.

          In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

          1.01 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:



          "Acquisition" has the meaning specified in the Preliminary Statements
to this Agreement.

          "Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

          "Administrative Agent's Office" means the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 10.02, or such
other address or account as the Administrative Agent may from time to time
notify the Borrower and the Lenders.

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

          "Affiliate" means, with respect to any 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. "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.

          "Agent-Related Persons" means the Administrative Agent, together with
its Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

          "Agents" means, collectively, the Administrative Agent, the
Co-Syndication Agents, the Co-Documentation Agents and the Supplemental
Administrative Agents (if any).

          "Aggregate Commitments" means the Commitments of all the Lenders.

          "Aggregate Credit Exposures" means, at any time, the sum of (i) the
unused portion of the Revolving Credit Commitment then in effect, (ii) the
unused portion of each Term Commitment then in effect and (iii) the Total
Outstandings at such time.

          "Agreement" means this Credit Agreement.

          "Applicable Rate" means a percentage per annum equal to:

          (a) with respect to Term Loans, (i) until the first Business Day
     immediately following the date on which the Compliance Certificate for the
     fiscal quarter ended March 31, 2004 is delivered pursuant to Section
     6.02(b), (A) for Eurodollar Rate Loans, 2.50% and (B) for Base Rate Loans,
     1.50%, and (ii) thereafter, (A) if the Leverage Ratio is less than
     3.50:1.00 as set forth in the most recent Compliance Certificate received
     by the Administrative Agent pursuant to Section 6.02(b), (1) for Eurodollar
     Rate Loans, 2.25% and (2) for Base Rate Loans, 1.25% and (B) if the
     Leverage Ratio is not less than 3.50:1.00 as set forth in the most recent
     Compliance Certificate received by the Administrative Agent pursuant to
     Section 6.02(b), (1) for Eurodollar Ratio Loans, 2.50% and (2) for Base
     Rate Loans, 1.50%; and

                                        2



          (b) with respect to the Revolving Credit Loans, (i) until the first
     Business Day immediately following the date on which the Compliance
     Certificate for the fiscal quarter ended March 31, 2004 is delivered
     pursuant to Section 6.02(b), (A) for Eurodollar Rate Loans, 2.50% and (B)
     for Base Rate Loans, 1.50% and (ii) thereafter, the following percentages
     per annum, based upon the Leverage Ratio as set forth in the most recent
     Compliance Certificate received by the Administrative Agent pursuant to
     Section 6.02(b):

                    Applicable Rate
- -------------------------------------------------------
                                 Eurodollar
                                  Rate and
Pricing                          Letters of
 Level       Leverage Ratio        Credit     Base Rate
- -------------------------------------------------------
   1            <=3.50:1            1.50%       0.50%
- -------------------------------------------------------
   2      >3.50:1 but <=4.00:1      1.75%       0.75%
- -------------------------------------------------------
   3      >4.00:1 but <=4.50:1      2.00%       1.00%
- -------------------------------------------------------
   4      >4.50:1 but <=5.00:1      2.25%       1.25%
- -------------------------------------------------------
   5            >5.00:1             2.50%       1.50%
- -------------------------------------------------------

Any increase or decrease in the Applicable Rate resulting from a change in the
Leverage Ratio shall become effective as of the first Business Day immediately
following the date a Compliance Certificate is delivered pursuant to Section
6.02(b); provided, however, that Pricing Level 5 shall apply as of the first
Business Day at any time after (x) the date on which a Compliance Certificate
was required to have been delivered but was not delivered or (y) an Event of
Default shall have occurred and be continuing.

          "Appropriate Lender" means, at any time, (a) with respect to the Term
Facility or the Revolving Credit Facility, a Lender that has a Commitment with
respect to such Facility at such time, (b) with respect to the Letter of Credit
Sublimit, (i) the L/C Issuer and (ii) if any Letters of Credit have been issued
pursuant to Section 2.03(a), the Revolving Credit Lenders and (c) with respect
to the Swing Line Facility, (i) the Swing Line Lender and (ii) if any Swing Line
Loans are outstanding pursuant to Section 2.04(a), the Revolving Credit Lenders.

          "Approved Domestic Bank" has the meaning specified in clause (b) of
the definition of "Cash Equivalents".

          "Approved Foreign Bank" has the meaning specified in clause (f) of the
definition of "Cash Equivalents".

          "Approved Fund" means any Fund that is administered, advised or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers, advises or manages a Lender.

          "Arrangers" means BAS and Deutsche Bank Securities Inc., in their
capacities as exclusive joint lead arrangers and exclusive joint book managers.

                                       3



          "Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit E.

          "Assumption Agreement" has the meaning specified in Section
4.01(a)(xvii).

          "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

          "Attributable Indebtedness" means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a capital lease.

          "Audited Financial Statements" means the audited consolidated balance
sheet of MFI and its Subsidiaries for the fiscal years ended December 31, 2001
and December 31, 2002, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal year of MFI and
its Subsidiaries, including the notes thereto.

          "Auto-Renewal Letter of Credit" has the meaning specified in Section
2.03(b)(iii).

          "Bank of America" means Bank of America, N.A. and its successors.

          "BAS" means Banc of America Securities LLC and its successors.

          "Base Rate" means for any day a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." The "prime rate" is a rate set by Bank of
America based upon various factors including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

          "Base Rate Loan" means a Loan that bears interest based on the Base
Rate.

          "Borrower" has the meaning specified in the introductory paragraph to
this Agreement.

          "Borrower Parties" means the collective reference to the Borrower and
its Subsidiaries, and "Borrower Party" means any one of them.

          "Borrowing" means a Revolving Credit Borrowing, a Swing Line Borrowing
or a Term Borrowing, as the context may require.

                                       4



          "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where the Administrative Agent's Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

          "Capital Expenditures" means, as of any date for the applicable period
then ended, all capital expenditures of the Borrower Parties on a consolidated
basis for such period, as determined in accordance with GAAP; provided, however,
that Capital Expenditures shall not include any such expenditures which
constitute (a) a Permitted Acquisition, (b) capital expenditures relating to the
construction or acquisition of any property which has been transferred to a
Person that is not a Borrower Party pursuant to a sale-leaseback transaction
permitted under Section 7.05(f) or (c) to the extent permitted by this
Agreement, a reinvestment of the Net Cash Proceeds of any Disposition in
accordance with Section 2.05(b)(ii) (other than any Dispositions under Sections
7.05(b) and (h)), Casualty Events or Equity Issuance by any Consolidated Party.

          "Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.

          "Cash Collateral" has the meaning specified in Section 2.03(g).

          "Cash Collateral Account" means a blocked, non-interest bearing
deposit account at Bank of America (or another commercial bank selected in
compliance with Section 6.19) in the name of the Administrative Agent and under
the sole dominion and control of the Administrative Agent, and otherwise
established in a manner satisfactory to the Administrative Agent.

          "Cash Collateralize" has the meaning specified in Section 2.03(g).

          "Cash Equivalents" means any of the following types of Investments, to
the extent owned by the Borrower or any of its Subsidiaries free and clear of
all Liens:

          (a) readily marketable obligations issued or directly and fully
     guaranteed or insured by the United States or any agency or instrumentality
     thereof having maturities of not more than three hundred and sixty (360)
     days from the date of acquisition thereof; provided, that the full faith
     and credit of the United States is pledged in support thereof;

          (b) time deposits with, or insured certificates of deposit or bankers'
     acceptances of, any commercial bank that (i) (A) is a Lender or (B) is
     organized under the laws of the United States, any state thereof or the
     District of Columbia or is the principal banking subsidiary of a bank
     holding company organized under the laws of the United States, any state
     thereof or the District of Columbia, and is a member of the Federal Reserve
     System, (ii) issues (or the parent of which issues) commercial paper rated
     at least P-1 (or the then equivalent grade) by Moody's or at least "A-1"
     (or the then equivalent grade) by S&P, and (iii) has combined capital and
     surplus of at least $500,000,000 (any such bank being an "Approved Domestic
     Bank"), in each case with maturities of not more than three hundred and
     sixty (360) days from the date of acquisition thereof;

                                       5



          (c) commercial paper and variable or fixed rate notes issued by an
     Approved Domestic Bank (or by the parent company thereof) or any variable
     rate note issued by, or guaranteed by a domestic corporation rated A-1 (or
     the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof)
     or better by Moody's, in each case with maturities of not more than three
     hundred and sixty (360) days from the date of acquisition thereof; and

          (d) repurchase agreements entered into by any Person with a bank or
     trust company (including any of the Lenders) or recognized securities
     dealer having capital and surplus in excess of $500,000,000 for direct
     obligations issued by or fully guaranteed by the United States in which
     such Person shall have a perfected first priority security interest
     (subject to no other Liens) and having, on the date of purchase thereof, a
     fair market value of at least 100% of the amount of the repurchase
     obligations; and

          (e) Investments, classified in accordance with GAAP as Current Assets
     of the Borrower or any of its Subsidiaries, in money market investment
     programs registered under the Investment Company Act of 1940, which are
     administered by financial institutions having capital of at least
     $500,000,000, and the portfolios of which are limited such that 95% of such
     investments are of the character, quality and maturity described in clauses
     (a), (b), (c) and (d) of this definition; and

          (f) solely with respect to any Foreign Subsidiary, non-Dollar
     denominated (i) certificates of deposit of, bankers acceptances of, or time
     deposits with, any commercial bank which is organized and existing under
     the laws of the country in which such Foreign Subsidiary maintains its
     chief executive office and principal place of business provided such
     country is a member of the Organization for Economic Cooperation and
     Development, and whose short-term commercial paper rating from S&P is at
     least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
     equivalent thereof (any such bank being an "Approved Foreign Bank") and
     maturing within twelve (12) months of the date of acquisition and (ii)
     equivalents of demand deposit accounts which are maintained with an
     Approved Foreign Bank.

          "Casualty Event" means any event that gives rise to the receipt by
Holdings, the Borrower or any of its Subsidiaries of any insurance proceeds or
condemnation awards in respect of any equipment, fixed assets or real property
(including any improvements thereon) to replace or repair such equipment, fixed
assets or real property.

          "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.

          "CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental Protection
Agency.

          "Change of Control" means the earlier to occur of (a) the Equity
Investors shall cease to have the power, directly or indirectly, to vote or
direct the voting of securities having a

                                       6



majority of the ordinary voting power for the election of directors of the
Borrower; provided, that the occurrence of the foregoing event shall not be
deemed a Change of Control if,

          (i) any time prior to the consummation of a Qualifying IPO, and for
     any reason whatever, (A) the Equity Investors otherwise have the right to
     designate (and does so designate) a majority of the board of directors of
     the Borrower or (B) the Equity Investors own of record and beneficially an
     amount of common stock of the Borrower equal to an amount more than fifty
     percent (50%) of the amount of common stock of the Borrower owned by the
     Equity Investors of record and beneficially as of the Closing Date and such
     ownership by the Equity Investors represents the largest single block of
     voting securities of the Borrower held by any Person or related group for
     purposes of Section 13(d) of the Securities and Exchange Act of 1934, as
     amended, or

          (ii) at any time after the consummation of a Qualifying IPO, and for
     any reason whatsoever, (A) no "person" or "group" (as such terms are used
     in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
     amended, but excluding any employee benefit plan of such person and its
     subsidiaries, and any person or entity acting in its capacity as trustee,
     agent or other fiduciary or administrator of any such plan), excluding the
     Equity Investors, shall become the "beneficial owner" (as defined in Rules
     13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of more than
     the greater of (x) thirty-five percent (35%) of the shares outstanding or
     (y) the percentage of the then outstanding voting stock of Borrower owned
     beneficially by the Equity Investors, (B) during any period of twelve (12)
     consecutive months, the board of directors of Borrower shall consist of a
     majority of the Continuing Directors or (C) the Equity Investors have the
     power, directly or indirectly, to vote or direct the voting of at least
     thirty percent (30%) of the voting of securities having a majority of the
     ordinary voting power for the election of directors of Holdings (or the
     Borrower after a Qualifying IPO of the Borrower); or

          (b) any "Change of Control" (or any comparable term) in any document
pertaining to the Senior Subordinated Notes, Senior Unsecured Term Notes or
Permitted Subordinated Indebtedness with an aggregate outstanding principal
amount in excess of the Threshold Amount; or

          (c) at any time prior to a Qualifying IPO of the Borrower, the
Borrower shall cease to be a wholly owned Subsidiary of Holdings.

          "Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 4.01.

          "Co-Documentation Agents" means General Electric Capital Corporation
and Cooperative Centrale Raiffeisen - Boerenleenbank B.A., "Rabobank
International," New York Branch, as Co-Documentation Agents under the Loan
Documents.

          "Co-Syndication Agents" means Deutsche Bank Securities Inc. and UBS
Securities LLC, as Co-Syndication Agents under the Loan Documents.

          "Code" means the U.S. Internal Revenue Code of 1986.

                                       7



          "Collateral" means all of the "Collateral" referred to in the
Collateral Documents and all of the other property and assets that are or are
required under the terms of the Collateral Documents to be subject to Liens in
favor of the Administrative Agent for the benefit of the Secured Parties.

          "Collateral Documents" means, collectively, the Security Agreement,
the Intellectual Property Security Agreement, the Mortgages, each of the
mortgages, collateral assignments, Security Agreement Supplements, IP Security
Agreement Supplements, security agreements, pledge agreements or other similar
agreements delivered to the Administrative Agent and the Lenders pursuant to
Section 6.12, and each of the other agreements, instruments or documents that
creates or purports to create a Lien in favor of the Administrative Agent for
the benefit of the Secured Parties.

          "Commitment" means a Term Commitment or a Revolving Credit Commitment,
as the context may require.

          "Committed Loan Notice" means a notice of (a) a Term Borrowing, (b) a
Revolving Credit Borrowing, (c) a conversion of Loans from one Type to the
other, or (d) a continuation of Eurodollar Rate Loans, pursuant to Section
2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

          "Company" has the meaning specified in the introductory paragraph to
this Agreement.

          "Compensation Period" has the meaning specified in Section
2.12(c)(ii).

          "Compliance Certificate" means a certificate substantially in the form
of Exhibit D.

          "Consolidated Cash Taxes" means, as of any date for the applicable
period ending on such date with respect to the Borrower Parties on a
consolidated basis, the aggregate of all income, franchise and similar taxes, as
determined in accordance with GAAP, to the extent the same are payable in cash
with respect to such period.

          "Consolidated EBITDA" means, as of any date for the applicable period
ending on such date with respect to any Person and its Subsidiaries on a
consolidated basis, the sum of (a) Consolidated Net Income, plus (b) an amount
which, in the determination of Consolidated Net Income for such period, has been
deducted for, without duplication,

     (i)  total interest expense,

     (ii) income, franchise and similar taxes and any tax distributions
          permitted to be made pursuant to Sections 7.06(f)(i) and (iii),

     (iii) depreciation and amortization expense,

     (iv) letter of credit fees,

                                       8



     (v)  non-cash expenses resulting from any employee benefit or management
          compensation plan or the grant of stock and stock options to employees
          of Holdings, the Borrower or any of their respective Subsidiaries
          pursuant to a written plan or agreement or the treatment of such
          options under variable plan accounting,

     (vi) all extraordinary charges,

     (vii)non-cash amortization of financing costs of such Person and its
          Subsidiaries,

     (viii) cash expenses incurred in connection with the Transaction or, to the
          extent permitted hereunder, any Investment permitted under Section
          7.02, Equity Issuance or Debt Issuance (in each case, whether or not
          consummated),

     (ix) any losses (or minus any gains) realized upon the disposition of
          property outside of the ordinary course of business,

     (x)  to the extent actually reimbursed, expenses incurred to the extent
          covered by indemnification provisions in any agreement in connection
          with a Permitted Acquisition,

     (xi) to the extent covered by insurance, expenses with respect to liability
          or casualty events, business interruption or product recalls,

     (xii) management fees permitted under Section 7.08(d),

     (xiii) any non-cash purchase accounting adjustment and any step-ups with
          respect to re-valuing assets and liabilities in connection with the
          Transaction or any Investment permitted under Section 7.02,

     (xiv) non-cash losses from Joint Ventures and non-cash minority interest
          reductions,

     (xv) fees and expenses in connection with the exchange of the Senior
          Subordinated Notes for registered notes with identical terms as
          contemplated by the Senior Subordinated Notes Indenture or exchanges
          or refinancings permitted by Section 7.14,

     (xvi) non-cash, non-recurring charges,

     (xvii) other non-recurring charges in an aggregate amount not to exceed
          $4,000,000 during any four (4) consecutive fiscal quarter period,

     (xviii) expenses representing the implied principal component under
          Synthetic Lease Obligations,

     (xix) expenses in connection with payments made by any such Person or its
          Subsidiaries with respect to industrial revenue bond financings and
          Guarantees in respect thereof,

                                       9



     (xx) losses from discontinued operations not to exceed $2,000,000 during
          any period of four (4) consecutive fiscal quarters,

     (xxi) other expenses of such Person and its Subsidiaries reducing
          Consolidated Net Income which do not represent a cash item in such
          period or any future period, and

     (xxii) with respect to any Event of Default of any covenant set forth in
          Section 7.11, the Net Cash Proceeds of any Permitted Equity Issuance
          to the Equity Investors solely to the extent that such Net Cash
          Proceeds (A) are actually received by the Borrower (including through
          capital contribution of such Net Cash Proceeds by Holdings to the
          Borrower) no later than fifteen (15) Business Days after the delivery
          of a Notice of Intent to Cure, (B) have not been applied to make any
          Restricted Payment, any Investment or any prepayment of Indebtedness,
          and (C) do not exceed the aggregate amount necessary to cure such
          Event of Default under Section 7.11 for any applicable period;
          provided, that the provisions of this clause (xxii) may be relied on
          for purposes of determining Consolidated EBITDA no more than two (2)
          times in any twelve-month period; it being understood that this clause
          (xxii) may not be relied on for purposes of calculating any financial
          ratios other than as applicable to Section 7.11, minus


(c) an amount which, in the determination of Consolidated Net Income, has been
included for

     (i)  all extraordinary gains and non-cash income during such period, and

     (ii) any gains realized upon the disposition of property outside of the
          ordinary course of business, plus/minus

(d) unrealized losses/gains in respect of Swap Contracts, all as determined in
accordance with GAAP;

provided, however, that, notwithstanding any other provision to the contrary
contained in this Agreement, for purposes of any calculation made under the
financial covenants set forth in Section 7.11 (including for purposes of the
definition of "Pro Forma Basis", but excluding for purposes of the definition of
"Applicable Rate"), no more than 15% of total Consolidated EBITDA for the
applicable period shall be attributable to Foreign Subsidiaries and/or
Investments in Joint Ventures; provided, further, that, Consolidated EBITDA for
such period shall be calculated after giving Pro Forma Effect to the Dairy
Disposition; provided, further, that to the extent the receipt of any Net Cash
Proceeds of any Permitted Equity Issuance are an effective addition to
Consolidated EBITDA as contemplated by, and in accordance with, the provisions
of clause (b)(xxii) above and, as a result thereof, any Event of Default of the
covenants set forth in Section 7.11 shall have been cured for any applicable
period, such cure shall be deemed to be effective as of the last day of such
applicable period. Notwithstanding anything to the contrary, Consolidated EBITDA
shall be deemed to be $35,500,000 for the fiscal quarter ended June 30, 2003 and
$36,400,000 for the fiscal quarter ended September 30, 2003.

          "Consolidated Funded Indebtedness" means, with respect to any Person
and its Subsidiaries on a consolidated basis, without duplication,

                                       10



     (a)  all obligations of such Person for borrowed money,

     (b)  all obligations of such Person evidenced by bonds, debentures, notes
          or similar instruments,

     (c)  all obligations of such Person under conditional sale or other title
          retention agreements relating to property purchased by such Person
          (other than customary reservations or retentions of title under
          agreements with suppliers entered into in the ordinary course of
          business),

     (d)  all obligations of such Person issued or assumed as the deferred
          purchase price of property or services purchased by such Person (other
          than accrued expenses and trade debt incurred in the ordinary course
          of business) which would appear as liabilities on a balance sheet of
          such Person and to the extent constituting contingent obligations,

     (e)  all Consolidated Funded Indebtedness of others secured by (or for
          which the holder of such Consolidated Funded Indebtedness has an
          existing right, contingent or otherwise, to be secured by) any Lien
          on, or payable out of the proceeds of production from, property owned
          or acquired by such Person, whether or not the obligations secured
          thereby have been assumed,

     (f)  all Guarantees of such Person with respect to Consolidated Funded
          Indebtedness of another Person,

     (g)  the implied principal component of all obligations of such Person
          under Capitalized Leases,

     (h)  the maximum amount of all standby letters of credit issued or bankers'
          acceptances facilities created for the account of such Person and,
          without duplication, all drafts drawn thereunder (to the extent
          unreimbursed),

     (i)  unless the holder thereof is a Loan Party or, if the issuer thereof is
          a Subsidiary of Holdings which is not a Loan Party, any other
          Subsidiary of Holdings, all Disqualified Equity Interests issued by
          such Person,

     (j)  the principal portion of all obligations of such Person under
          Synthetic Lease Obligations, and

     (k)  the Consolidated Funded Indebtedness of any partnership or
          unincorporated joint venture in which such Person is a general partner
          or a joint venturer to the extent such Consolidated Funded
          Indebtedness is recourse to such Person.

Notwithstanding any other provision of this Agreement to the contrary, (i) the
term "Consolidated Funded Indebtedness" shall not be deemed to include (x) any
earn-out obligation until such obligation becomes a liability on the balance
sheet of the applicable Person, (y) any deferred compensation arrangements or
(z) any non-compete or consulting obligations incurred in connection with
Permitted Acquisitions and (ii) the amount of Consolidated Funded

                                       11



Indebtedness for which recourse is limited either to a specified amount or to an
identified asset of such Person shall be deemed to be equal to such specified
amount (or, if less, the fair market value of such identified asset).

          "Consolidated Interest Charges" means, as of any date for the
applicable period ending on such date with respect to any Person and its
Subsidiaries on a consolidated basis, interest expense (including the
amortization of debt discount and premium, the interest component under
Capitalized Leases and the implied interest component under Synthetic Lease
Obligations, but excluding, to the extent included in interest expense, (i) fees
and expenses associated with the consummation of the Transaction, (ii) annual
agency fees paid to the Administrative Agent, (iii) costs associated with
obtaining Swap Contracts and (iv) fees and expenses associated with any
Investment permitted under Section 7.02, Equity Issuance or Debt Issuance
(whether or not consummated)), as determined in accordance with GAAP, to the
extent the same are payable in cash with respect to such period.

          "Consolidated Net Income" means, as of any date for the applicable
period ending on such date with respect to any Person and its Subsidiaries on a
consolidated basis, net income (excluding, without duplication, (i)
extraordinary items and (ii) any amounts attributable to Investments in any
Joint Venture to the extent that either (x) such amounts have not been
distributed in cash to such Person and its Subsidiaries during the applicable
period, (y) such amounts were not earned by such Joint Venture during the
applicable period or (z) there exists in respect of any future period any
encumbrance or restriction on the ability of such Joint Venture to pay dividends
or make any other distributions in cash on the Equity Interests of such Joint
Venture held by such Person and its Subsidiaries), as determined in accordance
with GAAP.

          "Consolidated Parties" means the collective reference to Holdings and
its Subsidiaries, and "Consolidated Party" means any one of them.

          "Consolidated Scheduled Funded Debt Payments" means, as of any date
for the applicable period ending on such date with respect to the Borrower
Parties on a consolidated basis, the sum of all scheduled payments of principal
on Consolidated Funded Indebtedness during such period (including the implied
principal component of payments due on Capitalized Leases during such period and
Synthetic Lease Obligations, less the reduction for all voluntary prepayments or
mandatory prepayments required pursuant to Section 2.05, in each case as applied
pursuant to Section 2.05), as determined in accordance with GAAP.

          "Continuing Directors" shall mean the directors of Holdings on the
Closing Date, after giving effect to the Acquisition and the other transactions
contemplated hereby, and each other director, if, in each case, such other
directors' nomination for election to the board of directors of Holdings (or the
Borrower after a Qualifying IPO of the Borrower) is recommended by a majority of
the then Continuing Directors or such other director receives the vote of the
Equity Investors in his or her election by the stockholders of Holdings (or the
Borrower after a Qualifying IPO of the Borrower).

          "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

                                       12



          "Control" has the meaning specified in the definition of "Affiliate."

          "Credit Extension" means each of the following: (a) a Borrowing and
(b) an L/C Credit Extension.

          "Current Assets" means, with respect to any Person, all assets of such
Person that, in accordance with GAAP, would be classified as current assets on
the balance sheet of a company conducting a business the same as or similar to
that of such Person, after deducting appropriate and adequate reserves therefrom
in each case in which a reserve is proper in accordance with GAAP.

          "Dairy Disposition" means the Disposition of the dairy business,
consisting of the development, manufacturing, processing, distribution,
marketing and sales of coffee creamers, half & half, whipping cream, soft-serve
mix and other specialty dairy items of MFI, to Suiza Dairy Group Inc., a
wholly-owned subsidiary of Dean Foods Company, the proceeds of which were
applied to the payment of taxes related to the operation and sale of the diary
business and repayment of a portion of MFI's senior bank debt.

          "Debt Issuance" means the issuance by any Person and its Subsidiaries
of any Indebtedness for borrowed money.

          "Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

          "Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

          "Default Rate" means an interest rate equal to (a) the Base Rate plus
(b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2.0% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus 2.0% per annum, in each
case, to the fullest extent permitted by applicable Laws.

          "Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Term Loans, Revolving Credit Loans, participations in L/C
Obligations or participations in Swing Line Loans required to be funded by it
hereunder within one (1) Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to the Administrative Agent or
any other Lender any other amount required to be paid by it hereunder within one
(1) Business Day of the date when due, unless the subject of a good faith
dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy
or insolvency proceeding.

          "Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction and any sale of
Equity Interests) of any property by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated

                                       13



therewith; provided, however, that "Disposition" and "Dispose" shall not be
deemed to include any issuance by Holdings of any of its Equity Interests to
another Person.

          "Disqualified Equity Interests" means any Equity Interest which, by
its terms (or by the terms of any security or other Equity Interests into which
it is convertible or for which it is exchangeable), or upon the happening of any
event or condition (a) matures or is mandatorily redeemable, pursuant to a
sinking fund obligations or otherwise, (b) is redeemable at the option of the
holder thereof, in whole or in part, (c) provides for the scheduled payments of
dividends in cash, or (d) is or becomes convertible into or exchangeable for
Indebtedness or any other Equity Interests that would constitute Disqualified
Equity Interests, in each case, prior to the date that is ninety one (91) days
after the Maturity Date of the Term Facility.

          "Dollar" and "$" mean lawful money of the United States.

          "Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States, any state thereof or the District of Columbia and any
other Subsidiary that is not a "controlled foreign corporation" under Section
957 of the Code.

          "Egg Products Inspection Act" means the Egg Products Inspection Act,
21 U.S.C.(S)1031, et seq., and its implementing regulations.

          "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, (ii) in the case of any assignment of
a Revolving Commitment, the L/C Issuer and the Swing Line Lender, and (iii)
unless an Event of Default has occurred and is continuing under Section 8.01(a)
or (f), the Borrower (each such approval not to be unreasonably withheld or
delayed); provided, that notwithstanding the foregoing, "Eligible Assignee"
shall not include (i) Holdings or any of its Affiliates or Subsidiaries or (ii)
Highland Capital Management, L.P. or any of its Affiliates or Subsidiaries.

          "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

          "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries 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.

          "Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.

                                       14



          "Equity Contributions" means, collectively, (a) the contribution by
the Sponsor and by the Management Shareholders of an aggregate amount not less
than $315,000,000 to Investors LLC, (b) the further contribution by Investors
LLC of all such contribution proceeds to Holdings, and (c) the further
contribution by Holdings of all such contribution proceeds to the Company in
order to consummate the Acquisition and the Mergers.

          "Equity Interests" means, with respect to any Person, all of the
shares, interests, rights, participations or other equivalents (however
designated) of capital stock of (or other ownership or profit interests or units
in) such Person and all of the warrants, options or other rights for the
purchase, acquisition or exchange from such Person of any of the foregoing
(including through convertible securities).

          "Equity Investors" means the Sponsor and the Management Shareholders
and the other members of Investors LLC as of the Closing Date.

          "Equity Issuance" means any issuance for cash by any Person and its
Subsidiaries to any other Person of (a) its Equity Interests, (b) any of its
Equity Interests pursuant to the exercise of options or warrants, (c) any of its
Equity Interests pursuant to the conversion of any debt securities to equity or
(d) any options or warrants relating to its Equity Interests. A Disposition
shall not be deemed to be an Equity Issuance.

          "ERISA" means the Employee Retirement Income Security Act of 1974.

          "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

          "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party
or any ERISA Affiliate.

          "Eurodollar Rate" means, for any Interest Period with respect to any
Eurodollar Rate Loan:

          (a) the rate per annum equal to the rate determined by the
     Administrative Agent to be the offered rate that appears on the page of the
     Telerate screen (or any successor thereto) that displays an average British
     Bankers Association Interest

                                       15



     Settlement Rate for deposits in Dollars (for delivery on the first day of
     such Interest Period) with a term equivalent to such Interest Period,
     determined as of approximately 11:00 a.m. (London time) two (2) Business
     Days prior to the first day of such Interest Period, or

          (b) if the rate referenced in the preceding clause (a) does not appear
     on such page or service or such page or service shall not be available, the
     rate per annum equal to the rate determined by the Administrative Agent to
     be the offered rate on such other page or other service that displays an
     average British Bankers Association Interest Settlement Rate for deposits
     in Dollars (for delivery on the first day of such Interest Period) with a
     term equivalent to such Interest Period, determined as of approximately
     11:00 a.m. (London time) two (2) Business Days prior to the first day of
     such Interest Period, or

          (c) if the rates referenced in the preceding clauses (a) and (b) are
     not available, the rate per annum determined by the Administrative Agent as
     the rate of interest at which deposits in Dollars for delivery on the first
     day of such Interest Period in same day funds in the approximate amount of
     the Eurodollar Rate Loan being made, continued or converted by Bank of
     America and with a term equivalent to such Interest Period would be offered
     by Bank of America's London Branch to major banks in the London interbank
     eurodollar market at their request at approximately 4:00 p.m. (London time)
     two (2) Business Days prior to the first day of such Interest Period.

          "Eurodollar Rate Loan" means a Loan that bears interest at a rate
based on the Eurodollar Rate.

          "Event of Default" has the meaning specified in Section 8.01.

          "Excess Cash Flow" means, with respect to any fiscal year period of
the Borrower Parties on a consolidated basis, an amount equal to (a)
Consolidated EBITDA minus (b) without duplication,

     (i)  Capital Expenditures,

     (ii) Consolidated Interest Charges,

     (iii) Consolidated Cash Taxes, including cash payments for Federal, state
          and other income tax liabilities incurred prior to the Closing Date,

     (iv) Consolidated Scheduled Funded Debt Payments,

     (v)  Restricted Payments made by the Borrower Parties to the extent that
          such Restricted Payments are permitted to be made under Section
          7.06(f),

     (vi) voluntary prepayments of any Indebtedness (other than the
          Obligations); provided, that (1) such prepayments are otherwise
          permitted hereunder and (2) if such Indebtedness consists of a
          revolving line of credit, the commitments under such line of credit
          are permanently reduced by the amount of such prepayment,

                                       16



     (vii) letter of credit fees,

     (viii) proceeds received by the Borrower Parties from insurance claims with
          respect to casualty events, business interruption or product recalls
          which reimburse prior business expenses,

     (ix) all extraordinary cash charges,

     (x)  cash payments made in satisfaction of non-current liabilities,

     (xi) cash expenses incurred in connection with the Transaction or, to the
          extent permitted hereunder, any Investment permitted under Section
          7.02, Equity Issuance or Debt Issuance (whether or not consummated),

     (xii) fees and expenses in connection with the exchange of the Senior
          Subordinated Notes for registered notes with identical terms as
          contemplated by the Senior Subordinated Notes Indenture or exchanges
          or refinancings permitted by Section 7.14,

     (xiii) cash indemnity payments received pursuant to indemnification
          provisions in any agreement in connection with a Permitted Acquisition
          (or in any similar agreement related to any other Acquisition
          consummated prior to the Closing Date),

     (xiv) non-recurring charges to the extent included in determining
          Consolidated EBITDA,

     (xv) other non-recurring charges in an aggregate amount not to exceed
          $4,000,000 during any four (4) consecutive fiscal quarter period,

     (xvi) expenses in connection with payments made by any Borrower Party with
          respect to industrial revenue bond financings and Guarantees in
          respect thereof,

     (xvii) expenses incurred in connection with deferred compensation
          arrangements in connection with the Transaction,

     (xviii) management fees permitted to be made under Section 7.08(d),

     (xix) expenses representing the implied principal component under Synthetic
          Lease Obligations,

     (xx) cash payments with respect to preferred customer contracts in excess
          of amortization with respect to preferred customer contracts,

     (xxi) cash from operations used to consummate a Permitted Acquisition,

     (xxii) to the extent added to Consolidated Net Income in determining
          Consolidated EBITDA, losses from discontinued operations for such
          period,

                                       17



     (xxiii) to the extent added to Consolidated Net Income in determining
          Consolidated EBITDA, Net Cash Proceeds of Permitted Equity Issuances,
          plus/minus

(c) changes in working capital.

          "Excluded Consideration" means, with respect to any Permitted
Acquisition, consideration consisting of (a) any Equity Interests (other than
Disqualified Equity Interests) of Holdings issued to the seller of the Equity
Interests, property or assets acquired in such Permitted Acquisition, (b) to the
extent not required at such time to prepay the Loans pursuant to Section
2.05(b), consideration consisting of the Net Cash Proceeds of (i) any Permitted
Equity Issuance consummated subsequent to the Closing Date, (ii) any Disposition
by Holdings or any of its Subsidiaries of the type described in Section 7.05(a),
(c), (f), (l) and (m), (iii) any Casualty Event that occurs subsequent to the
Closing Date, (iv) the incurrence or issuance of any Permitted Subordinated
Indebtedness permitted under Section 7.03 and (c) 25% of the amount of Excess
Cash Flow for any fiscal year (commencing with the fiscal year ended December
31, 2004).

          "Existing Credit Agreement" means that certain Credit Agreement dated
as of April 10, 2001 among the Target Company, MFI, the guarantors party
thereto, Bank of America, N.A., as agent, sole lead arranger and sole book
running manager, Bear, Stearns & Co., as syndication agent, and a syndicate of
lenders.

          "Existing Letters of Credit" means the Letters of Credit described on
Schedule 7.03.

          "Existing Notes" means the 11 3/4% Senior Subordinated Notes due 2011
of MFI.

          "Existing Notes Indenture" means the Indenture dated as of March 27,
2001 between MFI and BNY Midwest Trust Company, as amended, supplemented or
otherwise modified to the Closing Date (including, after giving effect to the
amendments contemplated by the Existing Notes Tender Offer) and as may be
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, but only to the extent permitted under the
terms of the Loan Documents.

          "Existing Notes Tender Offer" means the offer by the Company to
purchase up to 100.0% of the Existing Notes and the consent solicitation by the
Company to certain amendments of the Existing Notes Indenture, all as described
in the Existing Notes Tender Offer Documents, pursuant to which at least 80.0%
of the Existing Notes are required to be tendered.

          "Existing Notes Tender Offer Documents" means (a) the Offer to
Purchase and Consent Solicitation Statement, dated October 20, 2003, (b) the
Dealer Manager Agreement between the Company and Banc of America Securities LLC,
dated October 17, 2003, and (c) the Second Supplemental Indenture between
Michael Foods, Inc., certain note guarantors and BNY Midwest Trust Company (to
be entered into as of the Closing Date).

          "Facility" means the Term Facility, the Revolving Credit Facility, the
Swing Line Sublimit or the Letter of Credit Sublimit, as the context may
require.

                                       18



          "Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided, that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

          "Fee Letter" means the letter agreement, dated October 10, 2003, among
Holdings, the Company, BAS, Bank of America Bridge LLC and Bank of America.

          "First Merger" has the meaning specified in the Preliminary Statements
to this Agreement.

          "Food, Drug, and Cosmetic Act" means the Food, Drug, and Cosmetic Act,
21 U.S.C.(S)301, et seq., and its implementing regulations.

          "Food Industry Laws" means the Food Security Act, the Food, Drug, and
Cosmetic Act (21 U.S.C.(S)321, et seq.), PACA, the Egg Products Inspection Act,
the Minnesota Food Law (Minnesota Statutes, Ch. 31), the MWPDA, and all other
applicable Federal, state and local laws governing the production, packaging and
distribution of food, and all applicable rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

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

          "Foreign Lender" has the meaning specified in Section 10.15(a)(i).

          "Foreign Subsidiary" means any direct or indirect Subsidiary of the
Borrower which is not a Domestic Subsidiary.

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

          "Fund" means any Person (other than a natural person) that is engaged
in making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

          "Funded Debt" of any Person means Indebtedness of such Person that by
its terms matures more than one (1) year after the date of its creation or
matures within one (1) year

                                       19



from any date of determination but is renewable or extendible, at the option of
such Person, to a date more than one (1) year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one (1) year after such date.

          "GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

          "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

          "Granting Lender" has the meaning specified in Section 10.07(g).

          "Guarantee" means, as to any Person, without duplication, any (a) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the "primary obligor") in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term "Guarantee" as a verb has a
corresponding meaning.

          "Guarantors" means, collectively, Holdings and the Subsidiaries of the
Borrower listed on Schedule I and each other Subsidiary of the Borrower that
shall be required to execute and deliver a guaranty or guaranty supplement
pursuant to Section 6.12.

          "Guaranty" means, collectively, the Parent Guaranty and the Subsidiary
Guaranty.

                                       20




          "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.

          "Hedge Bank" means any Person that is a Lender or an Affiliate of a
Lender, in its capacity as a party to a Secured Hedge Agreement.

          "Holdings" has the meaning specified in the introductory paragraph to
this Agreement.

          "Holdings Consolidated Leverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis, as of the end of any fiscal
quarter of the Borrower for the four (4) fiscal quarter period ending on such
date, the ratio of (a) Consolidated Funded Indebtedness (net of cash and Cash
Equivalents on hand) of the Consolidated Parties on the last day of such period
to (b) Consolidated EBITDA of the Consolidated Parties for such period.

          "Honor Date" has the meaning specified in Section 2.03(c)(i).

          "ICC" has the meaning specified in Section 2.03(h).

          "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

          (a) all obligations of such Person for borrowed money and all
     obligations of such Person evidenced by bonds, debentures, notes, loan
     agreements or other similar instruments;

          (b) the maximum amount of all letters of credit (including standby and
     commercial), bankers' acceptances, bank guaranties, surety bonds,
     performance bonds and similar instruments issued or created by or for the
     account of such Person;

          (c) net obligations of such Person under any Swap Contract;

          (d) all obligations of such Person to pay the deferred purchase price
     of property or services (other than trade accounts payable in the ordinary
     course of business);

          (e) indebtedness (excluding prepaid interest thereon) secured by a
     Lien on property owned or being purchased by such Person (including
     indebtedness arising under conditional sales or other title retention
     agreements and mortgage, industrial revenue bond, industrial development
     bond and similar financings), whether or not such indebtedness shall have
     been assumed by such Person or is limited in recourse;

          (f) all Attributable Indebtedness;

                                       21



          (g) all obligations of such Person in respect of Disqualified Equity
     Interests; and

          (h) all Guarantees of such Person in respect of any of the foregoing.

          For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of Indebtedness of any Person for purposes
of clause (e) shall be deemed to be equal to the lesser of (i) the aggregate
unpaid amount of such Indebtedness and (ii) the fair market value of the
property encumbered thereby as determined by such Person in good faith.

          "Indemnified Liabilities" has the meaning set forth in Section 10.05.

          "Indemnitees" has the meaning set forth in Section 10.05.

          "Information" has the meaning specified in Section 10.08.

          "Information Memorandum" means the confidential information memorandum
dated October 2003 used by the Arrangers in connection with the syndication of
the Commitments.

          "Intellectual Property Security Agreement" means, collectively, the
intellectual property security agreement, substantially in the form of Exhibit I
hereto together with each other intellectual property security agreement
supplements executed and delivered pursuant to Section 6.12.

          "Interest Coverage Ratio" means, with respect to the Borrower Parties
on a consolidated basis, as of the end of any fiscal quarter of the Borrower for
the four (4) fiscal quarter period ending on such date with respect to the
Borrower Parties on a consolidated basis, the ratio of (a) Consolidated EBITDA
of the Borrower Parties to (b) Consolidated Interest Charges of the Borrower
Parties; provided, that when calculating the Interest Coverage Ratio,
Consolidated Interest Charges shall be equal to, (i) for the period ending March
31, 2004, Consolidated Interest Charges for the fiscal quarter ending March 31,
2004 multiplied by four (4); (ii) for the period ending June 30, 2004,
Consolidated Interest Charges calculated for the two (2) fiscal quarters ending
June 30, 2004 multiplied by two (2); and (iii) for the period ending September
30, 2004, Consolidated Interest Charges for the three (3) fiscal quarters ending
September 30, 2004 multiplied by one and one-third (1-1/3).

          "Interest Payment Date" means, (a) as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date of the Facility under which such Loan was made; provided, however,
that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base

                                       22



Rate Loan (including a Swing Line Loan), the last Business Day of each March,
June, September and December and the Maturity Date of the Facility under which
such Loan was made.

          "Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, or to the extent available, nine or twelve months
thereafter, as selected by the Borrower in its Committed Loan Notice; provided,
that:

          (a) any Interest Period that would otherwise end on a day that is not
     a Business Day shall be extended to the next succeeding Business Day unless
     such Business Day falls in another calendar month, in which case such
     Interest Period shall end on the next preceding Business Day;

          (b) any Interest Period that begins on the last Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest Period) shall end on
     the last Business Day of the calendar month at the end of such Interest
     Period; and

          (c) no Interest Period shall extend beyond the Maturity Date of the
     Facility under which such Loan was made.

          "Investment" means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of Equity Interests or debt or other securities of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption
of debt of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person and any arrangement pursuant to which the
investor incurs debt of the type referred to in clause (h) of the definition of
"Indebtedness" set forth in this Section 1.01 in respect of such Person, (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of all or substantially all of the property and assets or business of another
Person or assets constituting a business unit, line of business or division of
such Person, or (d) the Disposition of any property for less than the fair
market value thereof (other than Dispositions under Sections 7.05(d), (e), (h)
and (j). For purposes of covenant compliance, the amount of any Investment shall
be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.

          "Investors LLC" means MF Investors, LLC, a Delaware limited liability
company.

          "IP Rights" has the meaning set forth in Section 5.17.

          "IP Security Agreement Supplement" has the meaning specified in the
Security Agreement.

          "IRS" means the United States Internal Revenue Service.

                                       23



          "Joint Venture" means (a) any Person which would constitute an "equity
method investee" of the Borrower or any of its Subsidiaries, (b) any other
Person designated by the Borrower in writing to the Administrative Agent (which
designation shall be irrevocable) as a "Joint Venture" for purposes of this
Credit Agreement and more than 50% but less than 100% of whose Equity Interests
are directly owned by the Borrower or any of its Subsidiaries, and (c) any
Person in whom the Borrower or any of its Subsidiaries beneficially owns any
Equity Interest that is not a Subsidiary.

          "Junior Financing" has the meaning specified in Section 7.14.

          "Junior Financing Documentation" means the Senior Unsecured Term Loan
Agreement, the Senior Subordinated Notes, the Senior Subordinated Notes
Indenture or any documentation governing any other Junior Financing.

          "Laws" means, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law, including all Food Industry
Laws.

          "L/C Advance" means, with respect to each Revolving Credit Lender,
such Lender's funding of its participation in any L/C Borrowing in accordance
with its Pro Rata Share.

          "L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Revolving Credit Borrowing.

          "L/C Credit Extension" means, with respect to any Letter of Credit,
the issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.

          "L/C Issuer" means Bank of America in its capacity as issuer of
Letters of Credit hereunder, or any successor issuer of Letters of Credit
hereunder.

          "L/C Obligations" means, as at any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings.

          "Lender" has the meaning specified in the introductory paragraph to
this Agreement and, as the context requires, includes the L/C Issuer and the
Swing Line Lender.

          "Lending Office" means, as to any Lender, the office or offices of
such Lender described as such in such Lender's Administrative Questionnaire, or
such other office or offices as a Lender may from time to time notify the
Borrower and the Administrative Agent.

                                       24



          "Letter of Credit" means any letter of credit issued hereunder and
shall include the Existing Letters of Credit. A Letter of Credit may be a
commercial letter of credit or a standby letter of credit.

          "Letter of Credit Application" means an application and agreement for
the issuance or amendment of a Letter of Credit in the form from time to time in
use by the L/C Issuer.

          "Letter of Credit Expiration Date" means the day that is five (5) days
prior to the scheduled Maturity Date then in effect for the Revolving Credit
Facility (or, if such day is not a Business Day, the next preceding Business
Day).

          "Letter of Credit Sublimit" means an amount equal to $15,000,000. The
Letter of Credit Sublimit is part of, and not in addition to, the Revolving
Credit Facility.

          "Leverage Ratio" means, with respect to the Borrower Parties on a
consolidated basis, as of the end of any fiscal quarter of the Borrower for the
four (4) fiscal quarter period ending on such date, the ratio of (a)
Consolidated Funded Indebtedness (net of cash and Cash Equivalents on hand) of
the Borrower Parties on the last day of such period to (b) Consolidated EBITDA
of the Borrower Parties for such period.

          "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing).

          "Loan" means an extension of credit by a Lender to the Borrower under
Article II in the form of a Term Loan, a Revolving Credit Loan or a Swing Line
Loan.

          "Loan Documents" means, collectively, (a) for purposes of this
Agreement and the Notes and any amendment, supplement or other modification
hereof or thereof and for all other purposes other than for purposes of the
Guaranty and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii)
the Guaranty, (iv) the Collateral Documents, (v) the Fee Letter and (vi) each
Letter of Credit Application and (b) for purposes of the Guaranty and the
Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranty,
(iv) the Collateral Documents, (v) each Letter of Credit Application, (vi) the
Fee Letter, (vii) each Secured Hedge Agreement, and (viii) the Assumption
Agreement.

          "Loan Parties" means, collectively, the Borrower and each Guarantor.

          "Management Shareholders" means Gregg A. Ostrander and the other
members of management of the Borrower or its Subsidiaries who are investors in
Investors LLC on the Closing Date.

          "Master Agreement" has the meaning specified in the definition of
"Swap Contract".

                                       25



          "Material Adverse Effect" means (a) a material adverse effect on the
business, operations, assets, liabilities (actual or contingent) or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole,
(b) a material adverse effect on the ability of the Borrower or the Loan Parties
(taken as a whole) to perform their respective obligations under any Loan
Document to which the Borrower or any of the Loan Parties is a party or (c) a
material adverse effect on the rights and remedies of the Lenders under any Loan
Document.

          "Maturity Date" means (a) with respect to the Revolving Credit
Facility, the earlier of (i) November 21, 2009 and (ii) the date of termination
in whole of the Revolving Credit Commitments, the Letter of Credit Commitments,
and the Swing Line Commitments pursuant to Section 2.06(a) or 8.02, and (b) with
respect to the Term Facility, the earlier of (i) November 21, 2010 and (ii) the
date of termination in whole of the Term Commitments pursuant to Section 2.06(a)
or 8.02.

          "Maximum Rate" has the meaning specified in Section 10.10.

          "Merger Agreement" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Mergers" has the meaning specified in the Preliminary Statements to
this Agreement.

          "MFI" has the meaning specified in the Preliminary Statements to this
Agreement.

          "Moody's" means Moody's Investors Service, Inc. and any successor
thereto.

          "Mortgage" means, collectively, the deeds of trust, trust deeds and
mortgages made by the Loan Parties in favor or for the benefit of the
Administrative Agent on behalf of the Lenders substantially in the form of
Exhibit H (with such changes as may be customary to account for local law
matters), together with each other mortgage executed and delivered pursuant to
Section 6.12.

          "Mortgage Policies" has the meaning specified in Section 6.14(b)(ii).

          "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

          "MWPDA" means the Minnesota Wholesale Produce Dealers Act (Minnesota
Statutes, Ch. 27).

          "Net Cash Proceeds" means:

          (a) with respect to the Disposition of any asset by Holdings or any of
     its Subsidiaries or any Casualty Event, the excess, if any, of (i) the sum
     of cash and Cash Equivalents received in connection with such Disposition
     or Casualty Event (including

                                       26



     any cash or Cash Equivalents received by way of deferred payment pursuant
     to, or by monetization of, a note receivable or otherwise, but only as and
     when so received and, with respect to any Casualty Event, any insurance
     proceeds or condemnation awards in respect of such Casualty Event received
     by or paid to or for the account of Holdings or any of its Subsidiaries)
     over (ii) the sum of (A) the principal amount of any Indebtedness that is
     secured by the asset subject to such Disposition or Casualty Event and that
     is repaid in connection with such Disposition or Casualty Event (other than
     Indebtedness under the Loan Documents), (B) the out-of-pocket expenses
     incurred by Holdings or such Subsidiary in connection with such Disposition
     or Casualty Event, (C) income taxes reasonably estimated to be actually
     payable within two (2) years of the date of the relevant Disposition or
     Casualty Event as a result of any gain recognized in connection therewith,
     and (D) any reserve for adjustment in respect of (x) the sale price of such
     asset or assets established in accordance with GAAP and (y) any liabilities
     associated with such asset or assets and retained by the Borrower or any of
     its Subsidiaries after such sale or other disposition thereof, including,
     without limitation, pension and other post-employment benefit liabilities
     and liabilities related to environmental matters or against any
     indemnification obligations associated with such transaction and it being
     understood that "Net Cash Proceeds" shall include, without limitation, any
     cash or Cash Equivalents (i) received upon the Disposition of any non-cash
     consideration received by the Borrower or any of its Subsidiaries in any
     such Disposition and (ii) upon the reversal (without the satisfaction of
     any applicable liabilities in cash in a corresponding amount) of any
     reserve described in clause (D) of the preceding sentence or, if such
     liabilities have not been satisfied in cash and such reserve not reversed
     within three hundred and sixty-five (365) days after such Disposition or
     Casualty Event, the amount of such reserve;

          (b) with respect to the issuance of any Equity Interest by Holdings or
     any of its Subsidiaries, the excess of (i) the sum of the cash and Cash
     Equivalents received in connection with such sale over (ii) the investment
     banking fees, underwriting discounts and commissions, and other
     out-of-pocket expenses and other customary expenses, incurred by Holdings
     or such Subsidiary in connection with such sale; and

          (c) with respect to the incurrence or issuance of any Indebtedness by
     Holdings or any of its Subsidiaries, the excess, if any, of (i) the sum of
     the cash received in connection with such sale over (ii) the investment
     banking fees, underwriting discounts and commissions, and other
     out-of-pocket expenses and other customary expenses, incurred by Holdings
     or such Subsidiary in connection with such sale.

          "Non-Consenting Lender" has the meaning specified in Section 3.07(d).

          "Nonrenewal Notice Date" has the meaning specified in Section
2.03(b)(iii).

          "Note" means a Term Note or a Revolving Credit Note, as the context
may require.

          "Notice of Intent to Cure" has the meaning specified in Section
6.02(b).

          "NPL" means the National Priorities List under CERCLA.

                                       27



          "Obligations" means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan or Letter of Credit, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against any
Loan Party of any proceeding under any Debtor Relief Laws naming such Person as
the debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding. Without limiting the generality of the
foregoing, the Obligations of the Loan Parties under the Loan Documents include
(a) the obligation to pay principal, interest, Letter of Credit commissions,
charges, expenses, fees, Attorney Costs, indemnities and other amounts payable
by any Loan Party under any Loan Document and (b) the obligation of any Loan
Party to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of such
Loan Party.

          "Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

          "Other Taxes" has the meaning specified in Section 3.01(b).

          "Outstanding Amount" means (a) with respect to the Term Loans,
Revolving Credit Loans and Swing Line Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Term Loans, Revolving Credit Loans (including any
refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit
Extensions as a Revolving Credit Borrowing) and Swing Line Loans, as the case
may be, occurring on such date; and (b) with respect to any L/C Obligations on
any date, the amount of such L/C Obligations on such date after giving effect to
any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements of outstanding unpaid drawings under any Letters of Credit
(including any refinancing of outstanding unpaid drawings under Letters of
Credit or L/C Credit Extensions as a Revolving Credit Borrowing) or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date.

          "PACA" means the Perishable Agricultural Commodities Act, 7
U.S.C.(S) 499a, et seq. and its implementing regulations.

          "Parent Guaranty" means the Parent Guaranty made by Holdings in favor
of the Administrative Agent on behalf of the Lenders, substantially in the form
of Exhibit F-1.

          "Participant" has the meaning specified in Section 10.07(d).

                                       28



          "PBGC" means the Pension Benefit Guaranty Corporation.

          "Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or
any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five (5) plan years.

          "Permitted Acquisition" has the meaning specified in Section 7.02(i).

          "Permitted Encumbrances" has the meaning specified in the Mortgages.

          "Permitted Equity Issuance" means any sale or issuance of any Equity
Interests (other than Disqualified Equity Interests) of Holdings (and, after a
Qualifying IPO, of the Borrower) to the extent (a) permitted hereunder and (b)
the Net Cash Proceeds of which are not required to be applied to the prepayment
of the Loans pursuant to Section 2.05(b).

          "Permitted Holdco Debt" has the meaning specified in Section
7.03(c)(iii).

          "Permitted Refinancing " means, with respect to any Person, any
modification, refinancing, refunding, renewal or extension of any Indebtedness
of such Person; provided that (a) the principal amount (or accreted value, if
applicable) thereof does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so modified, refinanced, refunded, renewed or
extended except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such
modification, refinancing, refunding, renewal or extension and by an amount
equal to any existing commitments unutilized thereunder or as otherwise
permitted pursuant to Section 7.03, (b) such modification, refinancing,
refunding, renewal or extension has a final maturity date equal to or later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
modified, refinanced, refunded, renewed or extended, (c) if the Indebtedness
being modified, refinanced, refunded, renewed or extended is subordinated in
right of payment to the Obligations, such modification, refinancing, refunding,
renewal or extension is subordinated in right of payment to the Obligations on
terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being modified, refinanced, refunded,
renewed or extended, (d) the terms and conditions (including, if applicable, as
to collateral) of any such modified, refinanced, refunded, renewed or extended
Indebtedness are not materially less favorable to the Loan Parties or the
Lenders than the terms and conditions of the Indebtedness being modified,
refinanced, refunded, renewed or extended, (e) such modification, refinancing,
refunding, renewal or extension is incurred by the Person who is the obligor on
the Indebtedness being modified, refinanced, refunded, renewed or extended, and
(f) at the time thereof, no Default shall have occurred and be continuing.

          "Permitted Subordinated Indebtedness" means any unsecured Indebtedness
of the Borrower that (a) is expressly subordinated to the prior payment in full
in cash of the Obligations on terms and conditions no less favorable to the
Lenders than the terms and

                                       29



conditions of the Senior Subordinated Notes, (b) will not mature prior to the
date that is ninety-one (91) days after the Maturity Date of the Term Facility,
(c) has no scheduled amortization or payments of principal prior to the Maturity
Date of the Term Facility, and (d) has covenant, default and remedy provisions
no more restrictive, or mandatory prepayment, repurchase or redemption
provisions no more onerous or expansive in scope, than those contained in the
Senior Subordinated Notes Indenture, taken as a whole; provided any such
Indebtedness shall constitute Permitted Subordinated Indebtedness only if (i)
both before and after giving effect to the issuance or incurrence thereof, no
Default or Event of Default shall have occurred and be continuing, and (ii) if
the amount of such Indebtedness issued or incurred in any fiscal quarter exceeds
$5,000,000, the Chief Financial Officer of the Borrower shall have delivered an
officer's certificate demonstrating Pro Forma Compliance with the covenants set
forth in Section 7.11 in form and substance reasonably satisfactory to the
Administrative Agent, it being understood that any capitalized or paid-in-kind
interest or accreted principal on such Indebtedness shall not constitute an
issuance or incurrence of Indebtedness for purposes of this proviso.

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

          "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by any Loan Party or, with respect to any
such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.

          "Pledged Debt" has the meaning specified in the Security Agreement.

          "Pledged Interests" has the meaning specified in the Security
Agreement.

          "Post-Increase Revolving Lenders" has the meaning specified in Section
2.15(b).

          "Post-Increase Term Lenders" has the meaning specified in Section
2.14(b).

          "Pre-Increase Revolving Lenders" has the meaning specified in Section
2.15(b).

          "Pre-Increase Term Lenders" has the meaning specified in Section
2.14(b).

          "Pro Forma Basis", "Pro Forma Compliance" and "Pro Forma Effect"
means, for purposes of calculating compliance with Section 4.01(a)(x) and each
of the financial covenants set forth in Section 7.11 in respect of a Specified
Transaction, that such Specified Transaction and the following transactions in
connection therewith shall be deemed to have occurred as of the first day of the
applicable period of measurement in such covenant: (a) income statement items
(whether positive or negative) attributable to the property or Person subject to
such Specified Transaction, (i) in the case of the Dairy Disposition or a
Disposition of all or substantially all Equity Interests in any Subsidiary of
the Borrower or any division, product line, or facility used for operations of
the Borrower or any of its Subsidiaries, shall be excluded, and (ii) in the case
of a Permitted Acquisition or Investment described in the definition of
"Specified Transaction", shall be included, (b) any retirement of Indebtedness,
and (c) any Indebtedness incurred or assumed by the Borrower or any of its
Subsidiaries in connection therewith and if such Indebtedness has a floating or
formula rate, shall have an implied rate of interest for the applicable period
for purposes of this definition determined by utilizing the rate

                                       30



which is or would be in effect with respect to such Indebtedness as at the
relevant date of determination, provided, that the foregoing pro forma
adjustments may be applied to the financial covenants set forth in Section 7.11
solely to the extent that such adjustments are consistent with the definition of
Consolidated EBITDA and give effect to events that are (x) directly attributable
to such transaction, (y) expected to have a continuing impact on the Borrower
and its Subsidiaries and (z) factually supportable.

          "Pro Rata Share" means, with respect to each Lender at any time, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Commitments of such Lender under the
applicable Facility or Facilities at such time and the denominator of which is
the amount of the Aggregate Commitments under the applicable Facility or
Facilities at such time; provided, that if the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, then the Pro Rata Share of each Lender
shall be determined based on the Pro Rata Share of such Lender immediately prior
to such termination and after giving effect to any subsequent assignments made
pursuant to the terms hereof. The initial Pro Rata Share of each Lender is set
forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

          "Qualifying IPO" means the issuance by Holdings of its common Equity
Interests in an underwritten primary public offering (other than a public
offering pursuant to a registration statement on Form S-8) pursuant to an
effective registration statement filed with the SEC in accordance with the
Securities Act (whether alone or in connection with a secondary public
offering).

          "Real Properties" means those properties listed on Schedule 1.01
hereto.

          "Reduction Amount" has the meaning set forth in Section 2.05(b)(vi).

          "Register" has the meaning set forth in Section 10.07(c).

          "Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than events for which the thirty (30) day notice period
has been waived.

          "Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Term Loans or Revolving Credit Loans, a Committed
Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit
Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

          "Required Lenders" means, as of any date of determination, Lenders
having more than 50% of the sum of the (a) Total Outstandings (with the
aggregate amount of each Lender's risk participation and funded participation in
L/C Obligations and Swing Line Loans being deemed "held" by such Lender for
purposes of this definition), (b) aggregate unused Term Commitments and (c)
aggregate unused Revolving Credit Commitments; provided, that the unused Term
Commitment, unused Revolving Credit Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

                                       31



          "Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer or assistant treasurer of a Loan Party and,
as to any document delivered on the Closing Date, any vice president, secretary
or assistant secretary. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

          "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any Equity Interest 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, defeasance, acquisition, cancellation or
termination of any such Equity Interest, or on account of any return of capital
to the Borrower's stockholders, partners or members (or the equivalent Persons
thereof).

          "Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Loans of the same Type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by each of the
Revolving Credit Lenders pursuant to Section 2.01(b).

          "Revolving Credit Commitment" means, as to each Revolving Credit
Lender, its obligation to (a) make Revolving Credit Loans to the Borrower
pursuant to Section 2.01(b), (b) purchase participations in L/C Obligations, and
(c) purchase participations in Swing Line Loans, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite
such Lender's name on Schedule 2.01 under the caption "Revolving Credit
Commitment" or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable, as such amount may be adjusted from time
to time in accordance with this Agreement. The aggregate Commitment of all
Revolving Credit Lenders shall be $100,000,000 on the Closing Date, as such
amount may be adjusted from time to time in accordance with the terms of this
Agreement.

          "Revolving Credit Commitments Increase Effective Date" has the meaning
specified in Section 2.15(b).

          "Revolving Credit Facility" means, at any time, the aggregate amount
of the Revolving Credit Lenders' Revolving Credit Commitments at such time.

          "Revolving Credit Lender" means, at any time, any Lender that has a
Revolving Credit Commitment at such time.

          "Revolving Credit Loan" has the meaning specified in Section 2.01(b).

          "Revolving Credit Note" means a promissory note of the Borrower
payable to any Revolving Credit Lender or its registered assigns, in
substantially the form of Exhibit C-2 hereto, evidencing the aggregate
indebtedness of the Borrower to such Revolving Credit Lender resulting from the
Revolving Credit Loans made by such Revolving Credit Lender.

                                       32



          "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

          "SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

          "Second Merger" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Secured Hedge Agreement" means any Swap Contract required or
permitted under Article VI or VII that is entered into by and between any Loan
Party and any Hedge Bank.

          "Secured Obligations" has the meaning specified in the Security
Agreement.

          "Secured Parties" means, collectively, the Administrative Agent, the
Lenders, the Hedge Banks, the Supplemental Administrative Agent and each
co-agent or sub-agent appointed by the Administrative Agent from time to time
pursuant to Section 9.01(c).

          "Security Agreement" means, collectively, the Security Agreement
executed by the Loan Parties, substantially in the form of Exhibit G, together
with each other security agreement supplement executed and delivered pursuant to
Section 6.12.

          "Security Agreement Supplement" has the meaning specified in the
Security Agreement.

          "Senior Subordinated Notes" means the 8.00% unsecured senior
subordinated notes of the Borrower due 2013 in an aggregate principal amount of
$150,000,000 issued on the Closing Date, and any exchange notes issued in
exchange therefor, in each case, pursuant to the Senior Subordinated Notes
Indenture.

          "Senior Subordinated Notes Indenture" means the Indenture dated as of
the Closing Date between Wells Fargo Bank Minnesota, National Association, the
Borrower and the Guarantors, together with all instruments and other agreements
in connection therewith, as may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof, but only to the extent
permitted under the terms of the Loan Documents.

          "Senior Unsecured Term Loan Agreement" means the Senior Unsecured Term
Loan Agreement dated as of the Closing Date among the Borrower, Holdings, Bank
of America, as administrative agent, and the other agents and lenders party
thereto.

          "Senior Unsecured Term Loans" means the senior unsecured term loans of
the Borrower due 2011 in an aggregate principal amount of $135,000,000 made on
the Closing Date under the Senior Unsecured Term Loan Agreement.

          "Solvent" and "Solvency" mean, with respect to any Person on any date
of determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will

                                       33



be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

          "SPC" has the meaning specified in Section 10.07(g).

          "Specified Equity Issuances" means the sale or issuance by Holdings of
any of its Equity Interests in a public offering or in a private placement or
sale that is underwritten, managed, arranged, placed or initially purchased by
an investment bank (it being understood that the Sponsor is not an investment
bank), which, for the avoidance of doubt, does not include the sale or issuance
of any such Equity Interests to (a) the Equity Investors, their Affiliates,
related funds and limited partners, and (b) other Persons making additional
equity investments together with the Equity Investors after the Closing Date.

          "Specified Transaction" means, for any applicable period, the
following transactions: (a) the Dairy Disposition and (b) any Permitted
Acquisition or any Investment (or series of related Investments) made pursuant
to Section 7.02(o) to the extent consisting of the contribution(s) or other
transfer(s) of any property (other than cash) to a Joint Venture for
consideration less than the fair market value of such property.

          "Sponsor" means Thomas H. Lee Partners, L.P and its Affiliates.

          "Sponsor Management Agreement" means the Management Agreement dated
the Closing Date between THL Managers V, LLC and the Borrower, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, but only to the extent permitted under the terms of the Loan
Documents.

          "Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.

          "Subsidiary Guarantor" means, collectively, the Subsidiaries of the
Borrower that are Guarantors.

          "Subsidiary Guaranty" means, collectively, the Subsidiary Guaranty
made by the Subsidiary Guarantors in favor of the Administrative Agent on behalf
of the Lenders, substantially in the form of Exhibit F-2, together with each
other guaranty and guaranty supplement delivered pursuant to Section 6.12.

                                       34



          "Supplemental Administrative Agent" has the meaning specified in
Section 9.13 and "Supplemental Administrative Agents" shall have the
corresponding meaning.

          "Surviving Corporation" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Swap Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.

          "Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

          "Swing Line Borrowing" means a borrowing of a Swing Line Loan pursuant
to Section 2.04.

          "Swing Line Facility" means the revolving credit facility made
available by the Swing Line Lender pursuant to Section 2.04.

          "Swing Line Lender" means Bank of America in its capacity as provider
of Swing Line Loans, or any successor swing line lender hereunder.

          "Swing Line Loan" has the meaning specified in Section 2.04(a).

          "Swing Line Loan Notice" means a notice of a Swing Line Borrowing
pursuant to Section 2.04(b), which, if in writing, shall be substantially in the
form of Exhibit B.

          "Swing Line Sublimit" means an amount equal to the lesser of (a)
$10,000,000 and (b) the Revolving Credit Commitments. The Swing Line Sublimit is
part of, and not in addition to, the Revolving Credit Facility Commitments.

                                       35



          "Synthetic Lease Obligation" means the monetary obligation of a Person
under a so-called synthetic, off-balance sheet or tax retention lease.

          "Target Company" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Taxes" has the meaning specified in Section 3.01(a).

          "Term Borrowing" means a borrowing consisting of simultaneous Term
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period made by each of the Term Lenders pursuant to Section
2.01(a).

          "Term Commitment" means, as to each Term Lender, its obligation to
make Term Loans to the Borrower pursuant to Section 2.01(a) in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule 2.01 under the caption "Term Commitment"
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement. The aggregate Commitment of all Term Lenders
shall be $495,000,000 on the Closing Date, as such amount may be adjusted from
time to time in accordance with the terms of this Agreement.

          "Term Commitments Increase Effective Date" has the meaning set forth
in Section 2.14(b).

          "Term Facility" means, at any time, (a) prior to the initial advance
of the Term Loans, the aggregate Term Commitments of all Term Lenders at such
time, and (b) thereafter, the aggregate Term Loans of all Lenders at such time.

          "Term Loan" means an advance made by any Term Lender under the Term
Facility.

          "Term Lender" means, at any time, any Lender that has a Term
Commitment at such time.

          "Term Note" means a promissory note of the Borrower payable to any
Term Lender or its registered assigns, in substantially the form of Exhibit C-1
hereto, evidencing the aggregate indebtedness of the Borrower to such Term
Lender resulting from the Term Loans made by such Term Lender.

          "Threshold Amount" means $15,000,000.

          "Total Outstandings" means the aggregate Outstanding Amount of all
Loans and all L/C Obligations.

          "Transaction" means, collectively, (a) the Equity Contributions, (b)
the Acquisition, the First Merger and the Second Merger, (c) the refinancing of,
and termination of all commitments with respect to, the Existing Credit
Agreement and the other outstanding Indebtedness of the Target Company, MFI and
their respective Subsidiaries, including, without

                                       36



limitation, the Existing Notes tendered upon consummation of the Existing Notes
Tender Offer, except for such Indebtedness listed on Schedule 7.03 to remain
outstanding after the Closing Date and other Indebtedness permitted in
accordance with Section 7.03, (d) the issuance and sale of the Senior
Subordinated Notes, (e) the funding of the Term Loans, (f) the consummation of
any other transactions in connection with the foregoing, and (g) the payment of
the fees and expenses incurred in connection with any of the foregoing.

          "Type" means, with respect to a Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

          "Uniform Commercial Code" means the Uniform Commercial Code as the
same may from time to time be in effect in the State of New York or the Uniform
Commercial Code (or similar code or statute) of another jurisdiction, to the
extent it may be required to apply to any item or items of Collateral.

          "United States" and "U.S." mean the United States of America.

          "Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).

          "U.S. Lender" has the meaning set forth in Section 10.15(b).

          "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.

          "2003 Fourth Quarter" has the meaning set forth in Section 1.03(c).

          1.02 Other Interpretive Provisions. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

          (a) The meanings of defined terms are equally applicable to the
     singular and plural forms of the defined terms.

          (b) (i) The words "herein," "hereto," "hereof" and "hereunder" and
     words of similar import when used in any Loan Document shall refer to such
     Loan Document as a whole and not to any particular provision thereof.

          (ii) Article, Section, Exhibit and Schedule references are to the Loan
     Document in which such reference appears.

          (iii) The term "including" is by way of example and not limitation.

                                       37



          (iv) The term "documents" includes any and all instruments, documents,
     agreements, certificates, notices, reports, financial statements and other
     writings, however evidenced, whether in physical or electronic form.

          (c) In the computation of periods of time from a specified date to a
     later specified date, the word "from" means "from and including;" the words
     "to" and "until" each mean "to but excluding;" and the word "through" means
     "to and including."

          (d) Section headings herein and in the other Loan Documents are
     included for convenience of reference only and shall not affect the
     interpretation of this Agreement or any other Loan Document.

          1.03 Accounting Terms. (a) All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

          (b) If at any time any change in GAAP would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either
the Borrower or the Required Lenders shall so request, the Administrative Agent
and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided, that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders a written reconciliation in
form and substance reasonably satisfactory to the Administrative Agent, between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP.

          (c) With respect to the time period commencing October 1, 2003 and
ending on December 31, 2003 (the "2003 Fourth Quarter"), and notwithstanding the
actual accounting periods for which any financial statements were prepared for
the 2003 Fourth Quarter, the 2003 Fourth Quarter shall be deemed to constitute
one accounting period and each of Consolidated Net Income and Consolidated
EBITDA shall be calculated with all applicable financing statements prepared for
the 2003 Fourth Quarter taken as a whole.

          1.04 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

          1.05 References to Agreements and Laws. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to

                                       38



the extent that such amendments, restatements, extensions, supplements and other
modifications are permitted by any Loan Document; and (b) references to any Law
shall include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Law.

          1.06 Times of Day. Unless otherwise specified, all references herein
to times of day shall be references to Eastern time (daylight or standard, as
applicable).

          1.07 Timing of Payment or Performance. When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day, the date of
such payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day.

          1.08 Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Articles II, IX and X) or any of the other Loan
Documents to be in Dollars shall also include the equivalent of such amount in
any currency other than Dollars, such equivalent amount to be determined at the
rate of exchange quoted by Bank of America in Charlotte, North Carolina at the
close of business on the Business Day immediately preceding any date of
determination thereof, to prime banks in New York, New York for the spot
purchase in the New York foreign exchange market of such amount in Dollars with
such other currency.

                                   ARTICLE II
                      THE COMMITMENTS AND CREDIT EXTENSIONS

          2.01 The Loans. (a) The Term Borrowings. Subject to the terms and
conditions set forth herein, each Term Lender severally agrees to make a single
loan (consisting of a Term Loan) in an amount equal to its Pro Rata Share of the
Term Facility to the Borrower on (i) the Closing Date and (ii) if such Term
Lender has increased its Term Commitment pursuant to Section 2.14, the Term
Commitment Increase Effective Date. The Term Borrowing shall consist of Term
Loans made simultaneously by the Term Lenders in accordance with their
respective Pro Rata Share of the Term Facility. Amounts borrowed under this
Section 2.01(a) and repaid or prepaid may not be reborrowed. Term Loans may be
Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

          (b) The Revolving Credit Borrowings. Subject to the terms and
conditions set forth herein, each Revolving Credit Lender severally agrees to
make loans (each such loan, a "Revolving Credit Loan") to the Borrower from time
to time, on any Business Day until the Maturity Date, in an aggregate amount not
to exceed at any time outstanding the amount of such Lender's Revolving Credit
Commitment; provided, however, that after giving effect to any Revolving Credit
Borrowing, (i) on the Closing Date, (A) the aggregate Outstanding Amount of all
Revolving Credit Loans plus the aggregate Outstanding Amount of all Swing Line
Loans shall not exceed $10,000,000 and (B) the aggregate Outstanding Amount of
all L/C Obligations shall not exceed $8,000,000, (ii) the Total Outstandings
shall not exceed the Aggregate Commitments, and (iii) the aggregate Outstanding
Amount of the Revolving Credit Loans of any Lender, plus such Lender's Pro Rata
Share of the Outstanding Amount of all L/C Obligations, plus such Lender's Pro
Rata Share of the Outstanding Amount of all Swing Line Loans shall not

                                       39



exceed such Lender's Revolving Credit Commitment. Within the limits of each
Lender's Revolving Credit Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.01(b), prepay
under Section 2.05, and reborrow under this Section 2.01(b). Revolving Credit
Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein.

          2.02 Borrowings, Conversions and Continuations of Loans. (a) Each Term
Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans or
Revolving Credit Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans shall be made upon the Borrower's irrevocable notice to
the Administrative Agent, which may be given by telephone. Each such notice must
be received by the Administrative Agent not later than 12:30 p.m. (Charlotte,
North Carolina time) (i) three (3) Business Days prior to the requested date of
any Borrowing of, continuation of Eurodollar Rate Loans or any conversion of
Base Rate Loans to Eurodollar Rate Loans, and (ii) one (1) Business Day before
the requested date of any Borrowing of Base Rate Loans. Each telephonic notice
by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by
delivery to the Administrative Agent of a written Committed Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower.
Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a principal amount of $2,000,000 or a whole multiple of $1,000,000 in
excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each
Borrowing of or conversion to Base Rate Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan
Notice (whether telephonic or written) shall specify (i) whether the Borrower is
requesting a Term Borrowing, a Revolving Credit Borrowing, a conversion of Term
Loans or Revolving Credit Loans from one Type to the other, or a continuation of
Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Loans to be borrowed, converted or continued, (iv) the Type
of Loans to be borrowed or to which existing Term Loans or Revolving Credit
Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of Loan in
a Committed Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Term Loans or
Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any
such automatic conversion to Base Rate Loans shall be effective as of the last
day of the Interest Period then in effect with respect to the applicable
Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to,
or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but
fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one (1) month.

          (b) Following receipt of a Committed Loan Notice, the Administrative
Agent shall promptly notify each Lender of the amount of its Pro Rata Share of
the applicable Term Loans or Revolving Credit Loans, and if no timely notice of
a conversion or continuation is provided by the Borrower, the Administrative
Agent shall notify each Lender of the details of any automatic conversion to
Base Rate Loans described in Section 2.02(a). In the case of a Term Loan
Borrowing or a Revolving Credit Borrowing, each Appropriate Lender shall make
the amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent's Office not later than 1:00 p.m. on
the Business Day specified in the applicable Committed Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), the

                                       40



Administrative Agent shall make all funds so received available to the Borrower
in like funds as received by the Administrative Agent either by (i) crediting
the account of the Borrower on the books of Bank of America with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative Agent
by the Borrower; provided, however, that if, on the date the Committed Loan
Notice with respect to such Borrowing is given by the Borrower, there are Swing
Line Loans or L/C Borrowings outstanding, then the proceeds of such Borrowing
shall be applied, first, to the payment in full of any such L/C Borrowings,
second, to the payment in full of any such Swing Line Loans, and third, to the
Borrower as provided above.

          (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan unless the Borrower pays the amount due under Section 3.05
in connection therewith. During the existence of an Event of Default, no Loans
may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Required Lenders.

          (d) The Administrative Agent shall promptly notify the Borrower and
the Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate. The
determination of the Eurodollar Rate by the Administrative Agent shall be
conclusive in the absence of manifest error. At any time that Base Rate Loans
are outstanding, the Administrative Agent shall notify the Borrower and the
Lenders of any change in Bank of America's prime rate used in determining the
Base Rate promptly following the public announcement of such change.

          (e) After giving effect to all Term Borrowings, all Revolving Credit
Borrowings, all conversions of Term Loans or Revolving Credit Loans from one
Type to the other, and all continuations of Term Loans or Revolving Credit Loans
as the same Type, there shall not be more than fifteen (15) Interest Periods in
effect.

          (f) The failure of any Lender to make the Loan to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Loan on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any Borrowing.

          2.03 Letters of Credit. (a) The Letter of Credit Commitment. (i)
Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees,
in reliance upon the agreements of the other Revolving Credit Lenders set forth
in this Section 2.03, (1) from time to time on any Business Day during the
period from the Closing Date until the Letter of Credit Expiration Date, to
issue Letters of Credit for the account of the Borrower and to amend or renew
Letters of Credit previously issued by it, in accordance with Section 2.03(b),
and (2) to honor drafts under the Letters of Credit; and (B) the Revolving
Credit Lenders severally agree to participate in Letters of Credit issued for
the account of the Borrower; provided, that the L/C Issuer shall not be
obligated to make any L/C Credit Extension with respect to any Letter of Credit,
and no Lender shall be obligated to participate in any Letter of Credit if as of
the date of such L/C Credit Extension, (x) the Total Outstandings would exceed
the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Revolving
Credit Loans of any Lender, plus such Lender's Pro Rata Share of the Outstanding
Amount of all L/C Obligations,

                                       41



plus such Lender's Pro Rata Share of the Outstanding Amount of all Swing Line
Loans would exceed such Lender's Revolving Credit Commitment, or (z) the
Outstanding Amount of the L/C Obligations would exceed the Letter of Credit
Sublimit. Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower's ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit that have expired or that have
been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed
to have been issued pursuant hereto, and from and after the Closing Date shall
be subject to and governed by the terms and conditions hereof.

          (ii) The L/C Issuer shall be under no obligation to issue any Letter
of Credit if:

          (A) any order, judgment or decree of any Governmental Authority or
     arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer
     from issuing such Letter of Credit, or any Law applicable to the L/C Issuer
     or any request or directive (whether or not having the force of law) from
     any Governmental Authority with jurisdiction over the L/C Issuer shall
     prohibit, or request that the L/C Issuer refrain from, the issuance of
     letters of credit generally or such Letter of Credit in particular or shall
     impose upon the L/C Issuer with respect to such Letter of Credit any
     restriction, reserve or capital requirement (for which the L/C Issuer is
     not otherwise compensated hereunder) not in effect on the Closing Date, or
     shall impose upon the L/C Issuer any unreimbursed loss, cost or expense
     which was not applicable on the Closing Date and which, in each case, the
     L/C Issuer in good faith deems material to it;

          (B) subject to Section 2.03(b)(iii), the expiry date of such requested
     Letter of Credit would occur more than twelve months after the date of
     issuance or last renewal, unless the Required Lenders have approved such
     expiry date;

          (C) the expiry date of such requested Letter of Credit would occur
     after the Letter of Credit Expiration Date, unless all the Lenders have
     approved such expiry date;

          (D) the issuance of such Letter of Credit would violate one or more
     policies of the L/C Issuer; or

          (E) such Letter of Credit is in an initial amount less than $50,000,
     in the case of a commercial Letter of Credit, or $50,000, in the case of a
     standby Letter of Credit, or is to be denominated in a currency other than
     Dollars.

          (iii) The L/C Issuer shall be under no obligation to amend any Letter
of Credit if (A) the L/C Issuer would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

          (b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit. (i) Each Letter of Credit shall be issued or
amended, as the case may be, upon the request of the Borrower delivered to the
L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of
Credit Application, appropriately completed and signed by a Responsible Officer
of the Borrower. Such Letter of Credit Application must be

                                       42



received by the L/C Issuer and the Administrative Agent not later than 12:30
p.m. at least two (2) Business Days (or such later date and time as the L/C
Issuer may agree in a particular instance in its sole discretion) prior to the
proposed issuance date or date of amendment, as the case may be. In the case of
a request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail reasonably satisfactory to the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full
text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the L/C Issuer may reasonably
request. In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
reasonably satisfactory to the L/C Issuer (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a Business
Day); (C) the nature of the proposed amendment; and (D) such other matters as
the L/C Issuer may reasonably request.

          (ii) Promptly after receipt of any Letter of Credit Application, the
L/C Issuer will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter of
Credit Application from the Borrower and, if not, the L/C Issuer will provide
the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of
confirmation from the Administrative Agent that the requested issuance or
amendment is permitted in accordance with the terms hereof, then, subject to the
terms and conditions hereof, the L/C Issuer shall, on the requested date, issue
a Letter of Credit for the account of the Borrower or enter into the applicable
amendment, as the case may be. Immediately upon the issuance of each Letter of
Credit, each Revolving Credit Lender shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from the L/C Issuer a risk participation
in such Letter of Credit in an amount equal to the product of such Lender's Pro
Rata Share times the amount of such Letter of Credit.

          (iii) If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that has automatic renewal provisions (each, an
"Auto-Renewal Letter of Credit"); provided, that any such Auto-Renewal Letter of
Credit must permit the L/C Issuer to prevent any such renewal at least once in
each twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the "Nonrenewal Notice Date") in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, the Borrower shall not be required to make a specific request to
the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the renewal of such Letter of Credit at any
time to an expiry date not later than the Letter of Credit Expiration Date;
provided, however, that the L/C Issuer shall not permit any such renewal if (A)
the L/C Issuer has determined that it would have no obligation at such time to
issue such Letter of Credit in its renewed form under the terms hereof (by
reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B) it has
received notice (which may be by telephone or in writing) on or before the day
that is five (5) Business Days before the Nonrenewal Notice Date (1) from the
Administrative Agent that the Required Lenders have elected not to permit such
renewal or (2) from the Administrative Agent, any Revolving Credit

                                       43



Lender or the Borrower that one or more of the applicable conditions specified
in Section 4.02 is not then satisfied.

          (iv) Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto or to
the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and
the Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

          (c) Drawings and Reimbursements; Funding of Participations. (i) Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the L/C Issuer shall notify the Borrower and the
Administrative Agent thereof. If the L/C Issuer notifies the Borrower of such
payment prior to 11:00 a.m. (Charlotte, North Carolina time) on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an "Honor
Date"), the Borrower shall reimburse the L/C Issuer through the Administrative
Agent in an amount equal to the amount of such drawing; provided, that if such
notice is not provided to the Borrower prior to 11:00 a.m. (Charlotte, North
Carolina time) on the Honor Date, then the Borrower shall reimburse the L/C
Issuer through the Administrative Agent in an amount equal to the amount of such
drawing on the next succeeding Business Day and such extension of time shall be
reflected in computing fees in respect of any such Letter of Credit. If the
Borrower fails to so reimburse the L/C Issuer by such time, the Administrative
Agent shall promptly notify each Revolving Credit Lender of the Honor Date, the
amount of the unreimbursed drawing (the "Unreimbursed Amount"), and the amount
of such Revolving Credit Lender's Pro Rata Share thereof. In such event, the
Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base
Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.02 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Revolving Credit Commitments and the
conditions set forth in Section 4.02 (other than the delivery of a Committed
Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent
pursuant to this Section 2.03(c)(i) may be given by telephone if immediately
confirmed in writing; provided, that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.

          (ii) Each Revolving Credit Lender (including the Lender acting as L/C
Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds
available to the Administrative Agent for the account of the L/C Issuer at the
Administrative Agent's Office in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in
such notice by the Administrative Agent, whereupon, subject to the provisions of
Section 2.03(c)(iii), each Revolving Credit Lender that so makes funds available
shall be deemed to have made a Base Rate Loan to the Borrower in such amount.
The Administrative Agent shall remit the funds so received to the L/C Issuer.

          (iii) With respect to any Unreimbursed Amount that is not fully
refinanced by a Revolving Credit Borrowing of Base Rate Loans because the
conditions set forth in Section 4.02 cannot be satisfied or for any other
reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so refinanced,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at the Default Rate. In such event, each Revolving
Credit Lender's

                                       44



payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.03(c)(ii) shall be deemed payment in respect of its participation
in such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.03.

          (iv) Until each Revolving Credit Lender funds its Revolving Credit
Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer
for any amount drawn under any Letter of Credit, interest in respect of such
Lender's Pro Rata Share of such amount shall be solely for the account of the
L/C Issuer.

          (v) Each Revolving Credit Lender's obligation to make Revolving Credit
Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under
Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right which such Lender
may have against the L/C Issuer, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Revolving Credit Lender's obligation to make
Revolving Credit Loans pursuant to this Section 2.03(c) is subject to the
conditions set forth in Section 4.02 (other than delivery by the Borrower of a
Committed Loan Notice ). No such making of an L/C Advance shall relieve or
otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for
the amount of any payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.

          (vi) If any Revolving Credit Lender fails to make available to the
Administrative Agent for the account of the L/C Issuer any amount required to be
paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c)
by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled
to recover from such Lender (acting through the Administrative Agent), on
demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time
to time in effect. A certificate of the L/C Issuer submitted to any Revolving
Credit Lender (through the Administrative Agent) with respect to any amounts
owing under this Section 2.03(c)(vi) shall be conclusive absent manifest error.

          (d) Repayment of Participations. (i) If, at any time after the L/C
Issuer has made a payment under any Letter of Credit and has received from any
Revolving Credit Lender such Lender's L/C Advance in respect of such payment in
accordance with Section 2.03(c), the Administrative Agent receives for the
account of the L/C Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from the Borrower or otherwise,
including proceeds of Cash Collateral applied thereto by the Administrative
Agent), the Administrative Agent will distribute to such Lender its Pro Rata
Share thereof (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's L/C Advance was
outstanding) in the same funds as those received by the Administrative Agent.

                                       45



          (ii) If any payment received by the Administrative Agent for the
account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be
returned under any of the circumstances described in Section 10.06 (including
pursuant to any settlement entered into by the L/C Issuer in its discretion),
each Revolving Credit Lender shall pay to the Administrative Agent for the
account of the L/C Issuer its Pro Rata Share thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect.

          (e) Obligations Absolute. The obligation of the Borrower to reimburse
the L/C Issuer for each drawing under each Letter of Credit and to repay each
L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

          (i) any lack of validity or enforceability of such Letter of Credit,
     this Agreement, or any other agreement or instrument relating thereto;

          (ii) the existence of any claim, counterclaim, setoff, defense or
     other right that the Borrower may have at any time against any beneficiary
     or any transferee of such Letter of Credit (or any Person for whom any such
     beneficiary or any such transferee may be acting), the L/C Issuer or any
     other Person, whether in connection with this Agreement, the transactions
     contemplated hereby or by such Letter of Credit or any agreement or
     instrument relating thereto, or any unrelated transaction;

          (iii) any draft, demand, certificate or other document presented under
     such Letter of Credit proving to be forged, fraudulent, invalid or
     insufficient in any respect or any statement therein being untrue or
     inaccurate in any respect; or any loss or delay in the transmission or
     otherwise of any document required in order to make a drawing under such
     Letter of Credit;

          (iv) any payment by the L/C Issuer under such Letter of Credit against
     presentation of a draft or certificate that does not strictly comply with
     the terms of such Letter of Credit; or any payment made by the L/C Issuer
     under such Letter of Credit to any Person purporting to be a trustee in
     bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
     liquidator, receiver or other representative of or successor to any
     beneficiary or any transferee of such Letter of Credit, including any
     arising in connection with any proceeding under any Debtor Relief Law;

          (v) any exchange, release or nonperfection of any Collateral, or any
     release or amendment or waiver of or consent to departure from the Guaranty
     or any other guarantee, for all or any of the Obligations of the Borrower
     in respect of such Letter of Credit; or

          (vi) any other circumstance or happening whatsoever, whether or not
     similar to any of the foregoing, including any other circumstance that
     might otherwise constitute a defense available to, or a discharge of, the
     Borrower.

                                       46



          The Borrower shall promptly examine a copy of each Letter of Credit
and each amendment thereto that is delivered to it and, in the event of any
claim of noncompliance with the Borrower's instructions or other irregularity,
the Borrower will promptly notify the L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.

          (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
any Agent-Related Person nor any of the respective correspondents, participants
or assignees of the L/C Issuer shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit Application. The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrower's
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the L/C Issuer, any
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the L/C Issuer, shall be liable or responsible for any of the
matters described in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding, the
Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by the L/C Issuer's willful misconduct or gross
negligence or the L/C Issuer's willful or grossly negligent failure to pay under
any Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions of a
Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C
Issuer may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

          (g) Cash Collateral. Upon the request of the Administrative Agent, (i)
if the L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing and the
conditions set forth in Section 4.02 to a Revolving Credit Borrowing cannot then
be met, or (ii) if, as of the Letter of Credit Expiration Date, any Letter of
Credit may for any reason remain outstanding and partially or wholly undrawn,
the Borrower shall immediately Cash Collateralize the then Outstanding Amount of
all L/C Obligations (in an amount equal to such Outstanding Amount determined as
of the date of such L/C Borrowing or the Letter of Credit Expiration Date, as
the case may be). For purposes hereof, "Cash Collateralize" means to pledge and
deposit with or deliver to the Administrative Agent, for the benefit of the L/C
Issuer and the Lenders, as collateral for the L/C Obligations,

                                       47



cash or deposit account balances ("Cash Collateral") pursuant to documentation
in form and substance reasonably satisfactory to the Administrative Agent and
the L/C Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term have corresponding meanings. The Borrower hereby grants
to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders,
a security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing. Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America. If at any
time the Administrative Agent determines that any funds held as Cash Collateral
are subject to any right or claim of any Person other than the Administrative
Agent or that the total amount of such funds is less than the aggregate
Outstanding Amount of all L/C Obligations, the Borrower will, forthwith upon
demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited and held in the deposit accounts at Bank of
America as aforesaid, an amount equal to the excess of (a) such aggregate
Outstanding Amount over (b) the total amount of funds, if any, then held as Cash
Collateral that the Administrative Agent determines to be free and clear of any
such right and claim. Upon the drawing of any Letter of Credit for which funds
are on deposit as Cash Collateral, such funds shall be applied, to the extent
permitted under applicable law, to reimburse the L/C Issuer. To the extent the
amount of any Cash Collateral exceeds the then Outstanding Amount of such L/C
Obligations and so long as no Event of Default has occurred and is continuing,
the excess shall be refunded to the Borrower.

          (h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed
by the L/C Issuer and the Borrower when a Letter of Credit is issued (including
any such agreement applicable to an Existing Letter of Credit), (i) the rules of
the "International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the "ICC")
at the time of issuance shall apply to each commercial Letter of Credit.

          (i) Letter of Credit Fees. The Borrower shall pay to the
Administrative Agent for the account of each Revolving Credit Lender in
accordance with its Pro Rata Share a Letter of Credit fee for each Letter of
Credit equal to the Applicable Rate times the daily maximum amount then
available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit if such maximum amount
increases periodically pursuant to the terms of such Letter of Credit). Such
letter of credit fees shall be computed on a quarterly basis in arrears. Such
letter of credit fees shall be due and payable on the first Business Day after
the end of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter of
Credit Expiration Date and thereafter on demand. If there is any change in the
Applicable Rate during any quarter, the daily maximum amount of each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.

          (j) Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a
fronting fee with respect to each Letter of Credit in the amounts and at the
times specified in the Fee Letter. In

                                       48



addition, the Borrower shall pay directly to the L/C Issuer for its own account
the customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in effect. Such customary fees and standard costs
and charges are due and payable within five (5) Business Days of demand and are
nonrefundable.

          (k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.

          2.04 Swing Line Loans. (a) The Swing Line. Subject to the terms and
conditions set forth herein, the Swing Line Lender agrees to make loans (each
such loan, a "Swing Line Loan") to the Borrower from time to time on any
Business Day until the Maturity Date in an aggregate amount not to exceed at any
time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact
that such Swing Line Loans, when aggregated with the Pro Rata Share of the
Outstanding Amount of Loans and L/C Obligations of the Lender acting as Swing
Line Lender, may exceed the amount of such Lender's Commitment; provided,
however, that after giving effect to any Swing Line Loan, (i) the Total
Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate
Outstanding Amount of the Revolving Credit Loans of any Lender, plus such
Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus
such Lender's Pro Rata Share of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender's Revolving Credit Commitment; provided, further,
that the Borrower shall not use the proceeds of any Swing Line Loan to refinance
any outstanding Swing Line Loan. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Borrower may borrow under this Section
2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each
Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a
Swing Line Loan, each Revolving Credit Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a
risk participation in such Swing Line Loan in an amount equal to the product of
such Lender's Pro Rata Share times the amount of such Swing Line Loan.

          (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon
the Borrower's irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to
be borrowed, which shall be a minimum of $100,000, and (ii) the requested
borrowing date, which shall be a Business Day. Each such telephonic notice must
be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof. Unless the Swing Line
Lender has received notice (by telephone or in writing) from the Administrative
Agent (including at the request of any Revolving Credit Lender) prior to 2:00
p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing
Line Lender not to make such Swing Line Loan as a result of the limitations set
forth in

                                       49



the proviso to the first sentence of Section 2.04(a), or (B) that one or more of
the applicable conditions specified in Section 4.02 is not then satisfied, then,
subject to the terms and conditions hereof, the Swing Line Lender will, not
later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Notice, make the amount of its Swing Line Loan available to the Borrower.

          (c) Refinancing of Swing Line Loans. (i) The Swing Line Lender at any
time in its sole and absolute discretion may request, on behalf of the Borrower
(which hereby irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Revolving Credit Lender make a Base Rate Loan in an amount
equal to such Lender's Pro Rata Share of the amount of Swing Line Loans then
outstanding. Such request shall be made in writing (which written request shall
be deemed to be a Committed Loan Notice for purposes hereof) and in accordance
with the requirements of Section 2.02, without regard to the minimum and
multiples specified therein for the principal amount of Base Rate Loans, but
subject to the unutilized portion of the Aggregate Revolving Credit Commitments
and the conditions set forth in Section 4.02. The Swing Line Lender shall
furnish the Borrower with a copy of the applicable Committed Loan Notice
promptly after delivering such notice to the Administrative Agent. Each
Revolving Credit Lender shall make an amount equal to its Pro Rata Share of the
amount specified in such Committed Loan Notice available to the Administrative
Agent in immediately available funds for the account of the Swing Line Lender at
the Administrative Agent's Office not later than 1:00 p.m. on the day specified
in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each
Revolving Credit Lender that so makes funds available shall be deemed to have
made a Base Rate Loan to the Borrower in such amount. The Administrative Agent
shall remit the funds so received to the Swing Line Lender.

          (ii) If for any reason any Swing Line Loan cannot be refinanced by
such a Revolving Credit Borrowing in accordance with Section 2.04(c)(i), the
request for Base Rate Loans submitted by the Swing Line Lender as set forth
herein shall be deemed to be a request by the Swing Line Lender that each of the
Revolving Credit Lenders fund its risk participation in the relevant Swing Line
Loan and each Revolving Credit Lender's payment to the Administrative Agent for
the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be
deemed payment in respect of such participation.

          (iii) If any Revolving Credit Lender fails to make available to the
Administrative Agent for the account of the Swing Line Lender any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line
Lender shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the Federal Funds Rate from time to time in effect. A certificate of the Swing
Line Lender submitted to any Lender (through the Administrative Agent) with
respect to any amounts owing under this clause (iii) shall be conclusive absent
manifest error.

          (iv) Each Revolving Credit Lender's obligation to make Revolving
Credit Loans or to purchase and fund risk participations in Swing Line Loans
pursuant to this Section 2.04(c) shall be absolute and unconditional and shall
not be affected by any

                                       50



circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each
Revolving Credit Lender's obligation to make Revolving Credit Loans pursuant to
this Section 2.04(c) is subject to the conditions set forth in Section 4.02. No
such funding of risk participations shall relieve or otherwise impair the
obligation of the Borrower to repay Swing Line Loans, together with interest as
provided herein.

          (d) Repayment of Participations. (i) At any time after any Revolving
Credit Lender has purchased and funded a risk participation in a Swing Line
Loan, if the Swing Line Lender receives any payment on account of such Swing
Line Loan, the Swing Line Lender will distribute to such Lender its Pro Rata
Share of such payment (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's risk participation was
funded) in the same funds as those received by the Swing Line Lender.

          (ii) If any payment received by the Swing Line Lender in respect of
principal or interest on any Swing Line Loan is required to be returned by the
Swing Line Lender under any of the circumstances described in Section 10.06
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Revolving Credit Lender shall pay to the Swing Line Lender
its Pro Rata Share thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned, at a
rate per annum equal to the Federal Funds Rate. The Administrative Agent will
make such demand upon the request of the Swing Line Lender.

          (e) Interest for Account of Swing Line Lender. The Swing Line Lender
shall be responsible for invoicing the Borrower for interest on the Swing Line
Loans. Until each Revolving Credit Lender funds its Base Rate Loan or risk
participation pursuant to this Section 2.04 to refinance such Lender's Pro Rata
Share of any Swing Line Loan, interest in respect of such Pro Rata Share shall
be solely for the account of the Swing Line Lender.

          (f) Payments Directly to Swing Line Lender. The Borrower shall make
all payments of principal and interest in respect of the Swing Line Loans
directly to the Swing Line Lender.

          2.05 Prepayments. (a) Optional. (i) The Borrower may, upon notice to
the Administrative Agent, at any time or from time to time voluntarily prepay
Loans in whole or in part without premium or penalty; provided, that (1) such
notice must be received by the Administrative Agent not later than 12:30 p.m.
(Charlotte, North Carolina time) (A) three (3) Business Days prior to any date
of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base
Rate Loans; (2) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of $2,000,000 or a whole multiple of $500,000 in excess thereof; and (3)
any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or
a whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Loans to be prepaid.
The Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of the amount of such Lender's Pro Rata Share of such

                                       51



prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest thereon, together with any
additional amounts required pursuant to Section 3.05. Each prepayment of the
outstanding Term Loans pursuant to this Section 2.05(a) shall be applied, first,
in direct order of maturities, to any principal repayment installments thereof
that are due within eighteen (18) months after the date of such prepayment, and
second, on a pro-rata basis, to the other principal repayment installments
thereof; and each such prepayment shall be paid to the Lenders in accordance
with their respective Pro Rata Shares.

          (ii) The Borrower may, upon notice to the Swing Line Lender (with a
copy to the Administrative Agent), at any time or from time to time, voluntarily
prepay Swing Line Loans in whole or in part without premium or penalty;
provided, that (1) such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and
(2) any such prepayment shall be in a minimum principal amount of $100,000. Each
such notice shall specify the date and amount of such prepayment. If such notice
is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein.

          (iii) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower may rescind any notice of prepayment under Section
2.05(a)(i) or (a)(ii) if such prepayment would have resulted from a refinancing
of all of the Facilities, which refinancing shall not be consummated or shall
otherwise be delayed.

          (b) Mandatory. (i) Within five (5) Business Days after financial
statements have been delivered pursuant to Section 6.01(a) and the related
Compliance Certificate has been delivered pursuant to Section 6.02(b), the
Borrower shall prepay an aggregate principal amount of Loans in an amount equal
to 50% of Excess Cash Flow for the fiscal year covered by such financial
statements commencing with the fiscal year ended December 31, 2004; provided,
that such percentage shall be reduced to (A) 25% if the Leverage Ratio as of the
last day of the prior fiscal year was less than 3.75:1.00 and (B) 0% if the
Leverage Ratio as of the last day of the prior fiscal year was less than
2.75:1.00.

          (ii) (A) If (x) Holdings or any of its Subsidiaries Disposes of any
property or assets (other than any Disposition of any property or assets
permitted by Section 7.05(a), (b), (c), (d) (to the extent constituting a
Disposition by any Subsidiary that is not a Loan Party to a Loan Party), (e),
(g), (h), (i), (j) or (k)) or (y) any Casualty Event occurs, which in the
aggregate results in the realization or receipt by Holdings or such Subsidiary
of Net Cash Proceeds, in excess of $1,000,000, the Borrower shall (1) give
written notice to the Administrative Agent thereof on or prior to the date of
the realization or receipt of such Net Cash Proceeds and (2) except to the
extent the Borrower elects in such notice to reinvest all or a portion of such
Net Cash Proceeds in accordance with Section 2.05(b)(ii)(B) (which election may
only be made if no Event of Default has occurred and is then continuing), prepay
an aggregate principal amount of Loans in an amount equal to 100% of all Net
Cash Proceeds received therefrom within two (2) Business Days of receipt thereof
by Holdings or such Subsidiary.

                                       52



          (B) With respect to any Net Cash Proceeds realized or received with
respect to any Disposition (other than as specifically excluded in Section
2.05(b)(ii)(A)) or any Casualty Event, at the option of the Borrower, and so
long as no Event of Default shall have occurred and be continuing, the Borrower
may reinvest all or any portion of such Net Cash Proceeds in assets useful for
its business within three hundred and sixty-five (365) days (or, with respect to
the Net Cash Proceeds of a Casualty Event, five hundred and forty (540) days)
following receipt of such Net Cash Proceeds; provided, however, that if any Net
Cash Proceeds are no longer intended to be so reinvested at any time after
delivery of a notice of reinvestment election, an amount equal to any such Net
Cash Proceeds shall be immediately applied to the prepayment of the Loans as set
forth in this Section 2.05; provided, further, however, that no such Net Cash
Proceeds of a Casualty Event shall be reinvested for the repair or replacement
of property damaged or lost in such Casualty Event if the net book value of such
property exceeds $5,000,000 unless, after giving Pro Forma Effect to any
Indebtedness to be incurred in connection with such replacement or restoration,
the Loan Parties would be in compliance with the financial covenants set forth
in Section 7.11 as of the most recent fiscal quarter end preceding the date of
determination.

          (iii) The Borrower shall prepay an aggregate principal amount of Loans
in an amount equal to 50% of all Net Cash Proceeds received from any Specified
Equity Issuance (if the Leveraged Ratio as of the last day of the prior fiscal
quarter is equal to or greater than 3.00: 1.00); provided, that such percentage
shall be reduced to 25% if the Leverage Ratio as of the last day of the prior
fiscal quarter was less than 3.00:1.00.

          (iv) Upon the incurrence or issuance by Holdings or any of its
Subsidiaries of (A) any Indebtedness not expressly permitted to be incurred or
issued pursuant to Section 7.03 or (B) any Permitted Subordinated Indebtedness
under Section 7.03(a)(v), the Borrower shall prepay an aggregate principal
amount of Loans in an amount equal to 100% of all Net Cash Proceeds received
therefrom immediately upon receipt thereof by Holdings or such Subsidiary.

          (v) If for any reason the Total Outstandings at any time exceed the
Aggregate Commitments then in effect, the Borrower shall immediately prepay
Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal
to such excess; provided, however, that the Borrower shall not be required to
Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(v)
unless after the prepayment in full of the Loans and Swing Line Loans the Total
Outstandings exceed the Aggregate Commitments then in effect.

          (vi) Each prepayment of Loans pursuant to this Section 2.05(b) shall
be applied, first, in direct order of maturities, to any principal repayment
installments of the Term Facility that are due within six (6) months after the
date of such prepayment, second, on a pro-rata basis, to the other principal
repayment installments of the Term Facility and, thereafter, to the Revolving
Credit Facility (the amount of such prepayment, the "Reduction Amount") in the
manner set forth in clause (vii) of this Section 2.05(b); and each such
prepayment shall be paid to the Lenders in accordance with their respective Pro
Rata Shares.

          (vii) The Revolving Credit Facility shall be permanently reduced by
the Reduction Amount on the date of the applicable prepayment and such
prepayment shall be, first, applied to prepay L/C Borrowings outstanding at such
time until all such L/C Borrowings are paid in full, second, applied to prepay
Swing Line Loans outstanding at such time until all such

                                       53



Swing Line Loans are paid in full, third, applied to prepay Revolving Credit
Loans outstanding at such time until all such Revolving Credit Loans are paid in
full and, fourth, used to Cash Collateralize the L/C Obligations; and,
thereafter, the amount remaining, if any, after the prepayment in full of all
Loans and L/C Borrowings outstanding at such time and the L/C Obligations have
been Cash Collateralized in full may be retained by the Borrower for use in the
ordinary course of its business. Upon the drawing of any Letter of Credit which
has been Cash Collateralized, such funds shall be applied (without any further
action by or notice to or from the Borrower or any other Loan Party) to
reimburse the L/C Issuer or the Revolving Credit Lenders, as applicable.

          (viii) Funding Losses, Etc. All prepayments under this Section 2.05
shall be made together with, in the case of any such prepayment of a Eurodollar
Rate Loan on a date other than the last day of an Interest Period therefor, any
amounts owing in respect of such Eurodollar Rate Loan pursuant to Section 3.05.
Notwithstanding any of the other provisions of Section 2.05(b), so long as no
Event of Default shall have occurred and be continuing, if any prepayment of
Eurodollar Rate Loans is required to be made under this Section 2.05(b), other
than on the last day of the Interest Period therefor, the Borrower may, in its
sole discretion, deposit the amount of any such prepayment otherwise required to
be made thereunder into a Cash Collateral Account until the last day of such
Interest Period, at which time the Administrative Agent shall be authorized
(without any further action by or notice to or from the Borrower or any other
Loan Party) to apply such amount to the prepayment of such Loans in accordance
with this Section 2.05(b). Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent shall also be authorized (without any
further action by or notice to or from the Borrower or any other Loan Party) to
apply such amount to the prepayment of the outstanding Loans in accordance with
this Section 2.05(b).

          2.06 Termination or Reduction of Commitments. (a) Optional. The
Borrower may, upon written notice to the Administrative Agent, terminate the
unused portions of the Term Commitments, the Letter of Credit Sublimit, or the
unused Revolving Credit Commitments, or from time to time permanently reduce the
unused portions of the Term Commitments, the Letter of Credit Sublimit, or the
unused Revolving Credit Commitments; provided, that (i) any such notice shall be
received by the Administrative Agent five (5) Business Days prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $500,000 or any whole multiple of $100,000 in excess thereof
and (iii) the Borrower shall not terminate or reduce the unused portions of the
Term Commitments, the Letter of Credit Sublimit, or the unused Revolving Credit
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Outstandings would exceed the Aggregate Commitments.
Notwithstanding the foregoing, the Borrower may rescind or postpone any notice
of termination of the Commitments if such termination would have resulted from a
refinancing of all of the Facilities, which refinancing shall not be consummated
or otherwise shall be delayed.

          (b) Mandatory. (i) The Term Commitment of each Term Lender shall be
automatically and permanently reduced to $0 on the Closing Date.

          (ii) The Revolving Credit Facility shall be automatically and
permanently reduced ratably among the Revolving Credit Lenders on each date on
which the prepayment of the Revolving Credit Facility is required to be made
pursuant to Section 2.05(b) by an amount

                                       54



equal to the applicable Reduction Amount (regardless of whether any Revolving
Credit Loans, Swing Line Loans or Letters of Credit are then outstanding).

          (iii) If after giving effect to any reduction or termination of unused
Commitments under this Section 2.06, the Letter of Credit Sublimit or the Swing
Line Sublimit exceeds the amount of the Revolving Credit Facility, such Sublimit
shall be automatically reduced by the amount of such excess.

          (c) Application of Commitment Reductions; Payment of Fees. The
Administrative Agent will promptly notify the Lenders of any termination or
reduction of unused portions of the Term Commitment, the Letter of Credit
Sublimit, or the unused Revolving Credit Commitment under this Section 2.06.
Upon any reduction of unused Commitments under a Facility, the Commitment of
each Lender under such Facility shall be reduced by such Lender's Pro Rata Share
of the amount by which such Facility is reduced (other than the termination of
the Commitment of any Lender as provided in Section 3.07). All commitment fees
accrued until the effective date of any termination of the Aggregate Commitments
shall be paid on the effective date of such termination.

          2.07 Repayment of Loans. (a) Term Loans. The Borrower shall repay to
the Administrative Agent for the ratable account of the Term Lenders the
aggregate principal amount of all Term Loans outstanding in twenty-eight (28)
consecutive quarterly installments as follows (which installments shall be
reduced as a result of the application of prepayments in accordance with the
order of priority set forth in Section 2.05 or increased as a result of any
increase in the amount of Term Loans pursuant to Section 2.14 (such increased
amortization payments to be calculated in the same manner (and on the same
basis) as the schedule set forth below for the Term Loans made as of the Closing
Date)):

- -------------------------------------------------------------
Date                 Term Loan Principal Amortization Payment
- -------------------------------------------------------------
February 21, 2004,                 $  1,237,500
- -------------------------------------------------------------
May 21, 2004,                      $  1,237,500
- -------------------------------------------------------------
August 21, 2004,                   $  1,237,500
- -------------------------------------------------------------
November 21, 2004                  $  1,237,500
- -------------------------------------------------------------

- -------------------------------------------------------------
February 21, 2005,                 $  1,237,500
- -------------------------------------------------------------
May 21, 2005,                      $  1,237,500
- -------------------------------------------------------------
August 21, 2005,                   $  1,237,500
- -------------------------------------------------------------
November 21, 2005                  $  1,237,500
- -------------------------------------------------------------

- -------------------------------------------------------------
February 21, 2006,                 $  1,237,500
- -------------------------------------------------------------
May 21, 2006,                      $  1,237,500
- -------------------------------------------------------------
August 21, 2006,                   $  1,237,500
- -------------------------------------------------------------
November 21, 2006                  $  1,237,500
- -------------------------------------------------------------

- -------------------------------------------------------------
February 21, 2007,                 $  1,237,500
- -------------------------------------------------------------
May 21, 2007,                      $  1,237,500
- -------------------------------------------------------------
August 21, 2007,                   $  1,237,500
- -------------------------------------------------------------

                                       55



- -------------------------------------------------------------
Date                 Term Loan Principal Amortization Payment
- -------------------------------------------------------------
November 21, 2007                  $  1,237,500
- -------------------------------------------------------------

- -------------------------------------------------------------
February 21, 2008,                 $  1,237,500
- -------------------------------------------------------------
May 21, 2008,                      $  1,237,500
- -------------------------------------------------------------
August 21, 2008,                   $  1,237,500
- -------------------------------------------------------------
November 21, 2008                  $  1,237,500
- -------------------------------------------------------------

- -------------------------------------------------------------
February 21, 2009,                 $  1,237,500
- -------------------------------------------------------------
May 21, 2009,                      $  1,237,500
- -------------------------------------------------------------
August 21, 2009,                   $  1,237,500
- -------------------------------------------------------------
November 21, 2009                  $  1,237,500
- -------------------------------------------------------------

- -------------------------------------------------------------
February 21, 2010,                 $116,325,000
- -------------------------------------------------------------
May 21, 2010,                      $116,325,000
- -------------------------------------------------------------
August 21, 2010,                   $116,325,000
- -------------------------------------------------------------
November 21, 2010                  $116,325,000
- -------------------------------------------------------------

provided, however, that the final principal repayment installment of the Term
Loans shall be repaid on the Maturity Date and in any event shall be in an
amount equal to the aggregate principal amount of all Term Loans outstanding on
such date.

          (b) Revolving Credit Loans. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Maturity Date for the Revolving Credit Facility the aggregate principal
amount of all Revolving Credit Loans outstanding on such date.

          (c) Swing Line Loans. The Borrower shall repay each Swing Line Loan on
the earlier to occur of (i) the date five (5) Business Days after such Loan is
made and (ii) the Maturity Date.

          2.08 Interest. (a) Subject to the provisions of Section 2.08(b), (i)
each Eurodollar Rate Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to the
Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each
Base Rate Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate for Revolving
Credit Loans.

          (b) While any Event of Default set forth in Section 8.01(a) or (f)
exists, the Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
applicable Laws. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.

                                       56



          (c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

          2.09 Fees. In addition to certain fees described in Sections 2.03(i)
and (j):

          (a) Commitment Fee. The Borrower shall pay to the Administrative Agent
     for the account of each Revolving Credit Lender in accordance with its Pro
     Rata Share, a commitment fee equal to 0.50% per annum times the actual
     daily amount by which the aggregate Revolving Credit Commitments exceed the
     sum of (A) the Outstanding Amount of Revolving Credit Loans and (B) the
     Outstanding Amount of L/C Obligations; provided, however, that any
     commitment fee accrued with respect to any of the Commitments of a
     Defaulting Lender during the period prior to the time such Lender became a
     Defaulting Lender and unpaid at such time shall not be payable by the
     Borrower so long as such Lender shall be a Defaulting Lender except to the
     extent that such commitment fee shall otherwise have been due and payable
     by the Borrower prior to such time; and provided, further that no
     commitment fee shall accrue on any of the Commitments of a Defaulting
     Lender so long as such Lender shall be a Defaulting Lender. The commitment
     fee shall accrue at all times from the date hereof until the Maturity Date,
     including at any time during which one or more of the conditions in Article
     IV is not met, and shall be due and payable quarterly in arrears on the
     last Business Day of each March, June, September and December, commencing
     with the first such date to occur after the Closing Date, and on the
     Maturity Date for the applicable Facility. The commitment fee shall be
     calculated quarterly in arrears, and if there is any change in the
     Applicable Rate during any quarter, the actual daily amount shall be
     computed and multiplied by the Applicable Rate separately for each period
     during such quarter that such Applicable Rate was in effect.

          (b) Other Fees. (i) The Borrower shall pay to the Arrangers and the
     Administrative Agent for their own respective accounts fees in the amounts
     and at the times specified in the Fee Letter. Such fees shall be fully
     earned when paid and shall not be refundable for any reason whatsoever.

          (ii) The Borrower shall pay to the Agents such fees as shall have been
     separately agreed upon in writing in the amounts and at the times so
     specified. Such fees shall be fully earned when paid and shall not be
     refundable for any reason whatsoever.

     2.10 Computation of Interest and Fees. All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of three hundred and sixty-five (365)
or three hundred and sixty-six (366) days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the basis
of a three hundred and sixty (360) day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a three hundred and sixty-five (365) day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue
on a Loan, or any portion thereof, for the day on

                                       57



which the Loan or such portion is paid, provided, that any Loan that is repaid
on the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one (1) day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

          2.11 Evidence of Indebtedness. (a) The Credit Extensions made by each
Lender shall be evidenced by one or more accounts or records maintained by such
Lender and evidenced by one or more entries in the Register maintained by the
Administrative Agent, acting solely for purposes of Treasury Regulation Section
5f.103-1(c), as agent for the Borrower, in each case in the ordinary course of
business. The accounts or records maintained by the Administrative Agent and
each Lender shall be prima facie evidence absent manifest error of the amount of
the Credit Extensions made by the Lenders to the Borrower and the interest and
payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower hereunder to
pay any amount owing with respect to the Obligations. In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of
manifest error. Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Note payable to such Lender, which shall evidence such
Lender's Loans in addition to such accounts or records. Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable), amount
and maturity of its Loans and payments with respect thereto.

          (b) In addition to the accounts and records referred to in Section
2.11(a), each Lender and the Administrative Agent shall maintain in accordance
with its usual practice accounts or records and, in the case of the
Administrative Agent, entries in the Register, evidencing the purchases and
sales by such Lender of participations in Letters of Credit and Swing Line
Loans. In the event of any conflict between the accounts and records maintained
by the Administrative Agent and the accounts and records of any Lender in
respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error.

          (c) Entries made in good faith by the Administrative Agent in the
Register pursuant to Sections 2.11(a) and (b), and by each Lender in its account
or accounts pursuant to Sections 2.11(a) and (b), shall be prima facie evidence
of the amount of principal and interest due and payable or to become due and
payable from the Borrower to, in the case of the Register, each Lender and, in
the case of such account or accounts, such Lender, under this Agreement and the
other Loan Documents, absent manifest error; provided, that the failure of the
Administrative Agent or such Lender to make an entry, or any finding that an
entry is incorrect, in the Register or such account or accounts shall not limit
or otherwise affect the obligations of the Borrower under this Agreement and the
other Loan Documents.

          2.12 Payments Generally. (a) All payments to be made by the Borrower
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all
payments by the Borrower hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the
Administrative Agent's Office in Dollars and in immediately available

                                       58



funds not later than 2:00 p.m. on the date specified herein. The Administrative
Agent will promptly distribute to each Lender its Pro Rata Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender's Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

          (b) If any payment to be made by the Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Loans to be made in the
next succeeding calendar month, such payment shall be made on the immediately
preceding Business Day.

          (c) Unless the Borrower or any Lender has notified the Administrative
Agent, prior to the date any payment is required to be made by it to the
Administrative Agent hereunder, that the Borrower or such Lender, as the case
may be, will not make such payment, the Administrative Agent may assume that the
Borrower or such Lender, as the case may be, has timely made such payment and
may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to the Administrative Agent in immediately
available funds, then:

          (i) if the Borrower failed to make such payment, each Lender shall
     forthwith on demand repay to the Administrative Agent the portion of such
     assumed payment that was made available to such Lender in immediately
     available funds, together with interest thereon in respect of each day from
     and including the date such amount was made available by the Administrative
     Agent to such Lender to the date such amount is repaid to the
     Administrative Agent in immediately available funds at the Federal Funds
     Rate from time to time in effect; and

          (ii) if any Lender failed to make such payment, such Lender shall
     forthwith on demand pay to the Administrative Agent the amount thereof in
     immediately available funds, together with interest thereon for the period
     from the date such amount was made available by the Administrative Agent to
     the Borrower to the date such amount is recovered by the Administrative
     Agent (the "Compensation Period") at a rate per annum equal to the Federal
     Funds Rate from time to time in effect. When such Lender makes payment to
     the Administrative Agent (together with all accrued interest thereon), then
     such payment amount (excluding the amount of any interest which may have
     accrued and been paid in respect of such late payment) shall constitute
     such Lender's Loan included in the applicable Borrowing. If such Lender
     does not pay such amount forthwith upon the Administrative Agent's demand
     therefor, the Administrative Agent may make a demand therefor upon the
     Borrower, and the Borrower shall pay such amount to the Administrative
     Agent, together with interest thereon for the Compensation Period at a rate
     per annum equal to the rate of interest applicable to the applicable
     Borrowing. Nothing herein shall be deemed to relieve any Lender from its
     obligation to fulfill its Commitment or to prejudice any rights which the
     Administrative Agent or the Borrower may have against any Lender as a
     result of any default by such Lender hereunder.

                                       59



          A notice of the Administrative Agent to any Lender or the Borrower
with respect to any amount owing under this Section 2.12(c) shall be conclusive,
absent manifest error.

          (d) If any Lender makes available to the Administrative Agent funds
for any Loan to be made by such Lender as provided in the foregoing provisions
of this Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension
set forth in Article IV are not satisfied or waived in accordance with the terms
hereof, the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.

          (e) The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit and Swing Line Loans are several and not
joint. The failure of any Lender to make any Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan or purchase
its participation.

          (f) Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

          (g) Whenever any payment received by the Administrative Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all amounts due and payable to the Administrative Agent and the Lenders under or
in respect of this Agreement and the other Loan Documents on any date, such
payment shall be distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the order of priority set forth in
Section 8.03. If the Administrative Agent receives funds for application to the
Obligations of the Loan Parties under or in respect of the Loan Documents under
circumstances for which the Loan Documents do not specify the manner in which
such funds are to be applied, the Administrative Agent may, but shall not be
obligated to, elect to distribute such funds to each of the Lenders in
accordance with such Lender's Pro Rata Share of the sum of (a) the Outstanding
Amount of all Loans outstanding at such time and (b) the Outstanding Amount of
all L/C Obligations outstanding at such time, in repayment or prepayment of such
of the outstanding Loans or other Obligations then owing to such Lender.

          2.13 Sharing of Payments. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it, or
the participations in L/C Obligations or in Swing Line Loans held by it, any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Loans made by them and/or such subparticipations in the
participations in L/C Obligations or Swing Line Loans held by them, as the case
may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Loans or such participations, as the case may
be, pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender under any
of the circumstances described in Section 10.06 (including pursuant to any
settlement entered into by

                                       60



the purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff, but subject
to Section 10.09) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section 2.13 and will in each case notify the Lenders following any such
purchases or repayments. Each Lender that purchases a participation pursuant to
this Section 2.13 shall from and after such purchase have the right to give all
notices, requests, demands, directions and other communications under this
Agreement with respect to the portion of the Obligations purchased to the same
extent as though the purchasing Lender were the original owner of the
Obligations purchased.

          2.14 Increase in Term Commitments. (a) Provided there exists no
Default, upon notice to the Administrative Agent (which shall promptly notify
the Lenders), the Borrower may on up to three (3) different occasions (in the
aggregate with Section 2.15), request an increase in the Term Commitments by an
amount not exceeding $100,000,000; provided, that (i) after giving effect to any
such increase in the Term Commitments, the aggregate amount of increased
Commitments that have been effected pursuant to this Section 2.14 and Section
2.15 shall not exceed $100,000,000 at any time and (ii) any such increase shall
be in an aggregate amount of $500,000 or any whole multiple of $100,000 in
excess thereof. At the time of the sending of such notice, the Borrower (in
consultation with the Administrative Agent) shall specify the time period within
which each Lender is requested to respond (which shall in no event be less than
ten (10) Business Days from the date of delivery of such notice to the Lenders).
Each Lender shall notify the Administrative Agent within such time period
whether or not it agrees to increase its Term Commitment and, if so, whether by
an amount equal to, greater than, or less than its Pro Rata Share of such
requested increase. Any Lender not responding within such time period shall be
deemed to have declined to increase its Term Commitment. The Administrative
Agent shall notify the Borrower and each Lender of the Lenders' responses to
each request made hereunder. To achieve the full amount of a requested increase,
the Borrower may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance reasonably satisfactory to
the Administrative Agent and its counsel.

          (b) If the Term Commitments are increased in accordance with this
Section 2.14, the Administrative Agent and the Borrower shall determine the
effective date (the "Term Commitments Increase Effective Date") and the final
allocation of such increase. The Administrative Agent shall promptly notify the
Borrower and the Lenders of the final allocation of such increase and the Term
Commitments Increase Effective Date. As a condition precedent to such increase,
the Borrower shall deliver to the Administrative Agent a certificate of each
Loan Party dated as of the Term Commitments Increase Effective Date signed by a
Responsible Officer of such Loan Party (i) certifying and attaching (A) the
resolutions adopted by such Loan Party approving or consenting to such increase
and (B) a pro forma Compliance Certificate

                                       61



demonstrating that, upon after giving Pro Forma Effect to such increase, the
Loan Parties would be in compliance with the financial covenants set forth in
Section 7.11, and (ii) in the case of the Borrower, certifying that, before and
after giving effect to such increase, (A) the representations and warranties
contained in Article V and the other Loan Documents are true and correct in all
material respects on and as of the Term Commitments Increase Effective Date,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they are true and correct in all material
respects as of such earlier date, and except that for purposes of this Section
2.14, the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to subsections (a) and (b), respectively, of Section 6.01, and (B) no
Default exists. On each Term Commitments Increase Effective Date, each of the
Lenders having an Term Loan prior to such Term Commitments Increase Effective
Date (the "Pre-Increase Term Lenders") shall assign to any Lender making an
additional Term Loan on the Term Commitments Increase Effective Date (the
"Post-Increase Term Lenders"), and such Post-Increase Term Lenders shall
purchase from each Pre-Increase Term Lenders, at the principal amount thereof,
such interests in the Term Loans outstanding on such Term Commitments Increase
Effective Date as shall be necessary in order that, after giving effect to all
such assignments and purchases, such Term Loans will be held by Pre-Increase
Term Lenders and Post-Increase Term Lenders ratably in accordance with the
Outstanding Amount of Term Loans and increased Term Commitments after giving
effect to such increased Term Commitments.

          (c) This Section shall supersede any provisions in Section 2.06(b)(i),
2.13 or 10.01 to the contrary.

          2.15 Increase in Revolving Credit Commitments. (a) Provided there
exists no Default, upon notice to the Administrative Agent (which shall promptly
notify the Lenders), the Borrower may on up to three (3) different occasions (in
the aggregate with Section 2.14) request an increase in the Revolving Credit
Commitments by an amount not exceeding $50,000,000; provided, that (i) after
giving effect to any such increase in the Revolving Credit Commitments, the
aggregate amount of increased Commitments that have been effected pursuant to
Section 2.14 and this Section 2.15 shall not exceed $100,000,000 at any time and
(ii) any such increase shall be in an aggregate amount of $500,000 or any whole
multiple of $100,000 in excess thereof. At the time of the sending of such
notice, the Borrower (in consultation with the Administrative Agent) shall
specify the time period within which each Lender is requested to respond (which
shall in no event be less than ten (10) Business Days from the date of delivery
of such notice to the Lenders). Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its Revolving
Credit Commitment and, if so, whether by an amount equal to, greater than, or
less than its Pro Rata Share of such requested increase. Any Lender not
responding within such time period shall be deemed to have declined to increase
its Revolving Credit Commitment. The Administrative Agent shall notify the
Borrower and each Lender of the Lenders' responses to each request made
hereunder. To achieve the full amount of a requested increase, the Borrower may
also invite additional Eligible Assignees to become Lenders pursuant to a
joinder agreement in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

          (b) If the Revolving Credit Commitments are increased in accordance
with this Section 2.15, the Administrative Agent and the Borrower shall
determine the effective date

                                       62



(the "Revolving Credit Commitments Increase Effective Date") and the final
allocation of such increase. The Administrative Agent shall promptly notify the
Borrower and the Lenders of the final allocation of such increase and the
Revolving Credit Commitments Increase Effective Date. As a condition precedent
to such increase, the Borrower shall deliver to the Administrative Agent a
certificate of each Loan Party dated as of the Revolving Credit Commitments
Increase Effective Date signed by a Responsible Officer of such Loan Party (i)
certifying and attaching (A) the resolutions adopted by such Loan Party
approving or consenting to such increase and (B) a pro forma Compliance
Certificate demonstrating that, upon after giving pro forma effect to such
increase, the Loan Parties would be in compliance with the financial covenants
set forth in Section 7.11, and (ii) in the case of the Borrower, certifying
that, before and after giving effect to such increase, (A) the representations
and warranties contained in Article V and the other Loan Documents are true and
correct in all material respects on and as of the Revolving Credit Commitments
Increase Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct in all material respects as of such earlier date, and except that
for purposes of this Section 2.15, the representations and warranties contained
in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to subsections (a) and (b), respectively,
of Section 6.01, and (B) no Default exists. On each Revolving Credit Commitments
Increase Effective Date, each of the Lenders having a Revolving Credit
Commitment prior to such Revolving Credit Commitments Increase Effective Date
(the "Pre-Increase Revolving Lenders") shall assign to any Lender which is
acquiring a new or additional Revolving Credit Commitment on the Revolving
Credit Commitments Increase Effective Date (the "Post-Increase Revolving
Lenders"), and such Post-Increase Revolving Lenders shall purchase from each
Pre-Increase Revolving Lenders, at the principal amount thereof, such interests
in the Revolving Loans and participation interests in L/C Obligations and Swing
Line Loans outstanding on such Revolving Credit Commitments Increase Effective
Date as shall be necessary in order that, after giving effect to all such
assignments and purchases, such Revolving Loans and participation interests in
L/C Obligations and Swing Line Loans will be held by Pre-Increase Revolving
Lenders and Post-Increase Revolving Lenders ratably in accordance with their
Revolving Credit Commitments after giving effect to such increased Revolving
Credit Commitments.

          (c) This Section 2.15 shall supersede any provisions in Section 2.13
or 10.01 to the contrary.

                                   ARTICLE III
                TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

          3.01 Taxes. (a) Except as provided in this Section 3.01, any and all
payments by the Borrower to or for the account of any Agent or any Lender under
any Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities
(including additions to tax, penalties and interest) with respect thereto,
excluding, in the case of each Agent and each Lender, taxes imposed on or
measured by its overall net income or overall gross income (including branch
profits), and franchise (and similar) taxes imposed on it in lieu of net income
taxes, by the jurisdiction (or any political subdivision thereof) under the Laws
of which such Agent or such Lender, as the case may be, is organized or
maintains a

                                       63



Lending Office, and all liabilities (including additions to tax, penalties and
interest) with respect thereto (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to any Agent or any Lender, (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 3.01), each
of such Agent and such Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) within thirty (30) days after the date of such payment, the
Borrower shall furnish to such Agent or Lender (as the case may be) the original
or a certified copy of a receipt evidencing payment thereof to the extent such a
receipt is issued therefor, or other written proof of payment thereof that is
reasonably satisfactory to the Administrative Agent.

          (b) In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise, property,
intangible or mortgage recording taxes or charges or similar levies which arise
from any payment made under any Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Loan Document (hereinafter referred to as "Other Taxes").

          (c) The Borrower agrees to indemnify each Agent and each Lender for
(i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section
3.01) paid by such Agent and such Lender, and (ii) any liability (including
additions to tax, penalties, interest and expenses) arising therefrom or with
respect thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority;
provided such Agent or Lender, as the case may be, provides the Borrower with a
written statement thereof setting forth in reasonable detail the basis and
calculation of such amounts. Payment under this Section 3.01(c) shall be made
within thirty (30) days after the date such Lender or such Agent makes a demand
therefor.

          (d) The Borrower shall not be required pursuant to this Section 3.01
to pay any additional amount to, or to indemnify, any Lender or Agent, as the
case may be, to the extent that such Lender or such Agent becomes subject to
Taxes subsequent to the Closing Date (or, if later, the date such Lender or
Agent becomes a party to this Agreement) as a result of a change in the place of
organization of such Lender or Agent or a change in the lending office of such
Lender, except to the extent that any such change is requested or required by
the Borrower (and provided, that nothing in this clause (d) shall be construed
as relieving the Borrower from any obligation to make such payments or
indemnification in the event of a change that is a change in Law).

          (e) If the forms provided by a Lender or an Agent pursuant to Section
10.15(a) at the time such Lender or such Agent, as the case may be, first
becomes a party to this Agreement indicate a United States withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender or Agent, as the case may be, provides
the appropriate forms certifying that a lesser rate applies, whereupon

                                       64



withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such forms; provided, however, that, if at the date of
the Assignment and Acceptance pursuant to which a Lender becomes a party to this
Agreement, the Lender assignor was entitled to payments under clause (a) of this
Section 3.01 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender assignee on such date.

          (f) If any Lender or Agent determines that it has received a refund in
respect of any Taxes or Other Taxes as to which indemnification or additional
amounts have been paid to it by the Borrower pursuant to this Section 3.01, it
shall promptly remit such refund (including any interest included in such
refund) to the Borrower (to the extent that it determines that it can do so
without prejudice to the retention of the refund), net of all out-of-pocket
expenses of the Lender or Agent, as the case may be; provided, however, that the
Borrower, upon the request of the Lender or Agent, as the case may be, agrees
promptly to return such refund to such party in the event such party is required
to repay such refund to the relevant taxing authority. Such Lender or Agent, as
the case may be, shall, at the Borrower's request, provide the Borrower with a
copy of any notice of assessment or other evidence of the requirement to repay
such refund received from the relevant taxing authority (provided, that such
Lender or Agent may delete any information therein that such Lender or Agent
deems confidential). Nothing herein contained shall interfere with the right of
a Lender or Agent to arrange its tax affairs in whatever manner it thinks fit
nor oblige any Lender or Agent to claim any tax refund or to disclose any
information relating to its tax affairs or any computations in respect thereof
or require any Lender or Agent to do anything that would prejudice its ability
to benefit from any other refunds, credits, reliefs, remissions or repayments to
which it may be entitled.

          (g) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 3.01(a) or (c) with respect to such Lender it
will, if requested by the Borrower, use commercially reasonable efforts (subject
to such Lender's overall internal policies of general application and legal and
regulatory restrictions) to avoid the consequences of such event, including to
designate another Lending Office for any Loan or Letter of Credit affected by
such event; provided, that such efforts are made on terms that, in the
reasonable judgment of such Lender, cause such Lender and its Lending Office(s)
to suffer no material economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section 3.01(g) shall affect or postpone any of
the Obligations of the Borrower or the rights of such Lender pursuant to
Sections 3.01(a) and (c).

          3.02 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through
the Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrower shall, upon demand from such
Lender (with a copy to the Administrative Agent),

                                       65



prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to
Base Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day,
or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

          3.03 Inability to Determine Rates. If the Required Lenders determine
that for any reason adequate and reasonable means do not exist for determining
the Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, or that Dollar
deposits are not being offered to banks in the London interbank eurodollar
market for the applicable amount and the Interest Period of such Eurodollar Rate
Loan, the Administrative Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Rate Loans shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice. Upon receipt of such
notice, the Borrower may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or, failing that, will be
deemed to have converted such request into a request for a Borrowing of Base
Rate Loans in the amount specified therein.

          3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans. (a) If any Lender determines that as a result of the
introduction of or any change in or in the interpretation of any Law, in each
case after the date hereof, or such Lender's compliance therewith, there shall
be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or
participating in Letters of Credit, or a reduction in the amount received or
receivable by such Lender in connection with any of the foregoing (excluding for
purposes of this Section 3.04(a) any such increased costs or reduction in amount
resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern),
(ii) changes in the basis of taxation of overall net income or overall gross
income (including branch profits), and franchise (and similar) taxes imposed in
lieu of net income taxes, by the United States or any foreign jurisdiction or
any political subdivision of either thereof under the Laws of which such Lender
is organized or maintains a Lending Office, and (iii) reserve requirements
contemplated by Section 3.04(c), then from time to time upon demand of such
Lender setting forth in reasonable detail such increased costs (with a copy of
such demand to the Administrative Agent given in accordance with Section 3.06),
the Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction.

          (b) If any Lender determines that the introduction of any Law
regarding capital adequacy or any change therein or in the interpretation
thereof, in each case after the date hereof, or compliance by such Lender (or
its Lending Office) therewith, has the effect of reducing the rate of return on
the capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder (taking into consideration
its policies with respect to capital adequacy and such Lender's desired return
on capital), then from

                                       66



time to time upon demand of such Lender setting forth in reasonable detail the
charge and the calculation of such reduced rate of return (with a copy of such
demand to the Administrative Agent given in accordance with Section 3.06), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.

          (c) The Borrower shall pay to each Lender, as long as such Lender
shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), additional interest on the unpaid principal amount
of each Eurodollar Rate Loan equal to the actual costs of such reserves
allocated to such Loan by such Lender (as determined by such Lender in good
faith, which determination shall be conclusive in the absence of manifest
error), which shall be due and payable on each date on which interest is payable
on such Loan, provided the Borrower shall have received at least fifteen (15)
days' prior notice (with a copy to the Administrative Agent) of such additional
interest from such Lender. If a Lender fails to give notice fifteen (15) days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable fifteen (15) days from receipt of such notice.

          (d) The Borrower shall not be required to compensate a Lender
pursuant to Section 3.04(a), (b) or (c) for any such
increased cost or reduction incurred more than one hundred and eighty (180) days
prior to the date that such Lender demands, or notifies the Borrower of its
intention to demand, compensation therefor; provided, that, if the circumstance
giving rise to such increased cost or reduction is retroactive, then such
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

          3.05 Funding Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

          (a) any continuation, conversion, payment or prepayment of any Loan
     other than a Base Rate Loan on a day other than the last day of the
     Interest Period for such Loan (whether voluntary, mandatory, automatic, by
     reason of acceleration, or otherwise); or

          (b) any failure by the Borrower (for a reason other than the failure
     of such Lender to make a Loan) to prepay, borrow, continue or convert any
     Loan other than a Base Rate Loan on the date or in the amount notified by
     the Borrower;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

                                       67



          3.06 Matters Applicable to All Requests for Compensation. (a) A
certificate of any Agent or any Lender claiming compensation under this Article
III and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Agent or such Lender may use any reasonable averaging and
attribution methods.

          (b) With respect to any Lender's claim for compensation under Section
3.01, 3.02, 3.03 or 3.04, the Borrower shall not be required to compensate such
Lender for any amount incurred more than one hundred and eighty (180) days prior
to the date that such Lender notifies the Borrower of the event that gives rise
to such claim. If any Lender requests compensation by the Borrower under Section
3.04, the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender to make or continue
from one Interest Period to another Eurodollar Rate Loans, or to convert Base
Rate Loans into Eurodollar Rate Loans, until the event or condition giving rise
to such request ceases to be in effect (in which case the provisions of Section
3.06(c) shall be applicable); provided, that such suspension shall not affect
the right of such Lender to receive the compensation so requested.

          (c) If the obligation of any Lender to make or continue from one
Interest Period to another any Eurodollar Rate Loan, or to convert Base Rate
Loans into Eurodollar Rate Loans shall be suspended pursuant to Section 3.06(b)
hereof, such Lender's Eurodollar Rate Loans shall be automatically converted
into Base Rate Loans on the last day(s) of the then current Interest Period(s)
for such Eurodollar Rate Loans (or, in the case of an immediate conversion
required by Section 3.02, on such earlier date as required by Law) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.01, 3.02, 3.03 or 3.04 hereof that gave rise to such
conversion no longer exist:

          (i) to the extent that such Lender's Eurodollar Rate Loans have been
     so converted, all payments and prepayments of principal that would
     otherwise be applied to such Lender's Eurodollar Rate Loans shall be
     applied instead to its Base Rate Loans; and

          (ii) all Loans that would otherwise be made or continued from one
     Interest Period to another by such Lender as Eurodollar Rate Loans shall be
     made or continued instead as Base Rate Loans, and all Base Rate Loans of
     such Lender that would otherwise be converted into Eurodollar Rate Loans
     shall remain as Base Rate Loans.

          (d) If any Lender gives notice to the Borrower (with a copy to the
Agent) that the circumstances specified in Section 3.01, 3.02, 3.03 or 3.04
hereof that gave rise to the conversion of such Lender's Eurodollar Rate Loans
pursuant to this Section 3.06 no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist) at a time when Eurodollar
Rate Loans made by other Lenders are outstanding, such Lender's Base Rate Loans
shall be automatically converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding Eurodollar Rate Loans, to the extent
necessary so that, after giving effect thereto, all Loans held by the Lenders
holding Eurodollar Rate Loans and by such Lender are held pro rata (as to
principal amounts, interest rate basis, and Interest Periods) in accordance with
their respective Commitments.

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          3.07 Replacement of Lenders under Certain Circumstances. (a) If at any
time (i) the Borrower becomes obligated to pay additional amounts or indemnity
payments described in Section 3.01 or 3.04 as a result of any condition
described in such Sections or any Lender ceases to make Eurodollar Rate Loans as
a result of any condition described in Section 3.02 or 3.03, (ii) any Lender
becomes a Defaulting Lender or (iii) any Lender becomes a "Non-Consenting
Lender" (as defined below in this Section 3.07), then the Borrower may, on ten
(10) Business Days' prior written notice to the Administrative Agent and such
Lender, either (i) replace such Lender by causing such Lender to (and such
Lender shall be obligated to) assign pursuant to Section 10.07(b) (with the
assignment fee to be paid by the Borrower in such instance) all of its rights
and obligations under this Agreement to one or more Eligible Assignees;
provided, that neither the Administrative Agent nor any Lender shall have any
obligation to the Borrower to find a replacement Lender or other such Person or
(ii) terminate the Commitment of such Lender and repay all obligations of the
Borrower owing to such Lender relating to the Loans and participations held by
such Lender as of such termination date.

          (b) Any Lender being replaced pursuant to Section 3.07(a) above shall
(i) execute and deliver an Assignment and Assumption with respect to such
Lender's Commitment and outstanding Loans and participations in L/C Obligations
and Swing Line Loans, and (ii) deliver any Notes evidencing such Loans to the
Borrower or Administrative Agent. Pursuant to such Assignment and Assumption,
(i) the assignee Lender shall acquire all or a portion, as the case may be, of
the assigning Lender's Commitment and outstanding Loans and participations in
L/C Obligations and Swing Line Loans, (ii) all obligations of the Borrower owing
to the assigning Lender relating to the Loans and participations so assigned
shall be paid in full by the assignee Lender to such assigning Lender
concurrently with such assignment and assumption and (iii) upon such payment
and, if so requested by the assignee Lender, delivery to the assignee Lender of
the appropriate Note or Notes executed by the Borrower, the assignee Lender
shall become a Lender hereunder and the assigning Lender shall cease to
constitute a Lender hereunder with respect to such assigned Loans, Commitments
and participations, except with respect to indemnification provisions under this
Agreement, which shall survive as to such assigning Lender.

          (c) Notwithstanding anything to the contrary contained above, (i) the
Lender that acts as the L/C Issuer may not be replaced hereunder at any time
that it has any Letter of Credit outstanding hereunder unless arrangements
satisfactory to such L/C Issuer (including the furnishing of a back-up standby
letter of credit in form and substance, and issued by an issuer reasonably
satisfactory to such L/C Issuer or the depositing of cash collateral into a cash
collateral account in amounts and pursuant to arrangements reasonably
satisfactory to such L/C Issuer) have been made with respect to such outstanding
Letter of Credit and (ii) the Lender that acts as the Administrative Agent may
not be replaced hereunder except in accordance with the terms of Section 9.09.

          (d) In the event that (i) the Borrower or the Administrative Agent has
requested the Lenders to consent to a departure or waiver of any provisions of
the Loan Documents or to agree to any amendment thereto, (ii) the consent,
waiver or amendment in question requires the agreement of all affected Lenders
in accordance with the terms of Section 10.01 or all the Lenders with respect to
a certain class of the Loans and (iii) the Required

                                       69


Lenders have agreed to such consent, waiver or amendment, then any Lender who
does not agree to such consent, waiver or amendment shall be deemed a
"Non-Consenting Lender."

          3.08 Survival. All of the Borrower's obligations under this Article
III shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

                                   ARTICLE IV
                    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

          4.01 Conditions of Initial Credit Extension. The obligation of each
Lender to make its initial Credit Extension hereunder is subject to satisfaction
of the following conditions precedent:

          (a) The Administrative Agent's receipt of the following, each of which
     shall be originals or facsimiles (followed promptly by originals) unless
     otherwise specified, each properly executed by a Responsible Officer of the
     signing Loan Party, each in form and substance reasonably satisfactory to
     the Administrative Agent and its legal counsel:

               (i) executed counterparts of this Agreement and each Guaranty;

               (ii) a Note executed by the Borrower in favor of each Lender
          requesting a Note;

               (iii) the Security Agreement, duly executed by each Loan Party,
          together with:

                    (A) certificates representing the Pledged Interests referred
               to therein accompanied by undated stock powers executed in blank
               and instruments evidencing the Pledged Debt indorsed in blank,

                    (B) copies of proper financing statements, duly prepared for
               filing under the Uniform Commercial Code in all jurisdictions
               that the Administrative Agent may deem reasonably necessary or
               desirable in order to perfect and protect the Liens created under
               the Security Agreement, covering the Collateral described in the
               Security Agreement,

                    (C) evidence that all other actions, recordings and filings
               of or with respect to the Security Agreement that the
               Administrative Agent may deem reasonably necessary or desirable
               in order to perfect and protect the Liens created thereby shall
               have been taken, completed or otherwise provided for in a manner
               reasonably satisfactory to the Administrative Agent (including,
               without limitation, receipt of duly executed payoff letters and
               UCC-3 termination statements);

               (iv) the Intellectual Property Security Agreement, duly executed
          by each Loan Party, together with evidence that all action that the
          Administrative Agent in its reasonable judgment may deem reasonably
          necessary or desirable in

                                       70



          order to perfect and protect the Liens created under the Intellectual
          Property Security Agreement has been taken;

               (v) such certificates of resolutions or other action, incumbency
          certificates and/or other certificates of Responsible Officers of each
          Loan Party as the Administrative Agent may require evidencing the
          identity, authority and capacity of each Responsible Officer thereof
          authorized to act as a Responsible Officer in connection with this
          Agreement and the other Loan Documents to which such Loan Party is a
          party or is to be a party;

               (vi) such documents and certifications as the Administrative
          Agent may reasonably require to evidence that each Loan Party is duly
          organized or formed, and that each of the Borrower and the Guarantors
          is validly existing, in good standing and qualified to engage in
          business in each jurisdiction where its ownership, lease or operation
          of properties or the conduct of its business requires such
          qualification, except to the extent that failure to be so qualified
          could not reasonably be expected to have a Material Adverse Effect;

               (vii) an opinion of Weil, Gotshal & Manges LLP, counsel to the
          Loan Parties, addressed to each Agent and each Lender, as to the
          matters set forth in Exhibit J-1, and as to such other matters
          concerning the Loan Parties and the Loan Documents as the
          Administrative Agent shall reasonably request;

               (viii) opinions of local counsel for the Loan Parties, addressed
          to each Agent and each Lender, as to the matters set forth in Exhibit
          J-2, and as to such other matters concerning the Loan Parties and the
          Loan Documents as the Administrative Agent shall reasonably request;

               (ix) a certificate signed by a Responsible Officer of the
          Borrower certifying that there has been no event or circumstance since
          December 31, 2002, that has had or could be reasonably expected to
          have, either individually or in the aggregate, a Material Adverse
          Effect;

               (x) a certificate of the Responsible Officer of each of Holdings
          and the Borrower certifying that (A) the "Consolidated EBITDA" as
          defined in, and calculated in accordance with, the Existing Credit
          Agreement after giving Pro Forma Effect to the Dairy Disposition of
          the Borrower and its Subsidiaries for the twelve-month period ended
          September 30, 2003 was not less than $141,800,000, (B) the ratio of
          Consolidated Funded Indebtedness of the Borrower and its Subsidiaries
          at the Closing Date to the "Consolidated EBITDA" as defined in, and
          calculated in accordance with, the Existing Credit Agreement after
          giving Pro Forma Effect to the Dairy Disposition of the Borrower and
          its Subsidiaries for the twelve-month period ended on the last day of
          the fiscal quarter ended September 30, 2003, was not greater than
          5.65:1, and (C) the pro forma financial statements delivered pursuant
          to Section 5.05(d) were prepared in good faith on the basis of the
          assumptions stated therein, which assumptions are fair in light of the
          then existing conditions;

                                       71



               (xi) a certificate attesting to the Solvency of the Loan Parties
          (taken as a whole) after giving effect to the Transaction, from the
          Chief Financial Officer of the Borrower;

               (xii) the financial statements described in Sections 5.05(a), (b)
          and (d);

               (xiii) a certified copy of the Sponsor Management Agreement;

               (xiv) evidence that all insurance required to be maintained
          pursuant to the Loan Documents has been obtained and is in effect;

               (xv) certified copies of the Merger Agreement, duly executed by
          the parties thereto, together with all agreements, instruments and
          other documents delivered in connection therewith as the
          Administrative Agent shall reasonably request;

               (xvi) (A) copies of certificates of merger or other confirmation
          reasonably satisfactory to the Lenders to be filed with the Secretary
          of State of the State of Delaware for each Merger, (B) confirmation
          from the Target Company and the Company, or their respective counsel
          that such certificates are to be so filed immediately after such
          confirmation and (C) on the Closing Date, but after the consummation
          of the Transaction, certified copies of such certificates of the
          consummation of the First Merger and the Second Merger from the
          Secretary of State of the State of Delaware;

               (xvii) an assumption agreement in substantially the form of
          Exhibit K hereto (the "Assumption Agreement"), duly executed by the
          Surviving Corporation in connection with the Mergers;

               (xviii) a Committed Loan Notice or Letter of Credit Application,
          as applicable, relating to the initial Credit Extension; and

               (xix) such other assurances, certificates, documents, consents or
          opinions as the Administrative Agent reasonably may require.

          (b) All fees and expenses required to be paid on or before the Closing
     Date shall have been paid in full in cash.

          (c) There shall exist no action, suit, investigation, litigation or
     proceeding affecting any Loan Party or any of its Subsidiaries pending or,
     to the knowledge of any Loan Party or any of its Subsidiaries, threatened
     before any Governmental Authority or arbitrator that could be reasonably
     likely to have a Material Adverse Effect.

          (d) All governmental authorizations and all material third party
     consents and approvals necessary in connection with the Transaction shall
     have been obtained (without the imposition of any conditions that are not
     reasonably acceptable to the Administrative Agent) and shall remain in
     effect; all applicable waiting periods in connection with the Transaction
     shall have expired without any action being taken by any Governmental

                                       72



     Authority (including, without limitation, the expiration of the requisite
     waiting period under the Hart Scott-Rodino Antitrust Improvements Act of
     1975), and no Law shall be applicable in the reasonable judgment of the
     Administrative Agent, in each case that restrains, prevents or imposes
     materially adverse conditions upon the Transaction.

          (e) The information contained in the Information Memorandum, as
     supplemented to the Closing Date and taken as a whole, shall be complete
     and correct in all material respects, and no changes, occurrences or
     developments shall have occurred, and no information shall have been
     received or discovered by the Administrative Agent that, either
     individually or in the aggregate, could reasonably be expected to (1) have
     (or have had) a material adverse effect on business, operations, assets,
     liabilities (actual or contingent), results of operations or condition
     (financial or otherwise) of the Consolidated Parties, taken as a whole, (2)
     adversely affect (or has adversely affected) the ability of the Borrower or
     any Guarantor to perform its obligations under any of the Loan Documents or
     (3) adversely affect (or has adversely affected) the rights and remedies of
     the Lenders under the applicable loan documentation.

          (f) The Merger Agreement shall be in full force and effect.

          (g) Simultaneously with the initial Credit Extension, the Equity
     Contributions, Acquisition and the First Merger shall be consummated in
     accordance with the terms of the Merger Agreement, without any waiver or
     amendment not reasonably satisfactory to the Administrative Agent, and in
     compliance with all applicable requirements of Law and, after giving effect
     to the Transaction, (i) at least 20% of the consolidated capitalization of
     Holdings shall be in the form of common Equity Interests and (ii) no less
     than 75% of such common Equity Interests shall have been contributed in
     cash (and not through any direct or indirect rollover of any direct or
     indirect Equity Interests in the Target Company).

          (h) Immediately following the First Merger, the Second Merger shall be
     consummated.

          (i) The Administrative Agent shall be reasonably be satisfied with (A)
     any amendments, modification and supplements to the Merger Agreement, and
     (B) all agreements, instruments and documents relating to each other aspect
     of the Transaction.

          (j) The Borrower shall have received at least (i) $150,000,000 in
     gross cash proceeds from the sale of the Senior Subordinated Notes and (ii)
     at least $135,000,000 in gross cash proceeds from the Senior Unsecured Term
     Loans.

          4.02 Conditions to All Credit Extensions. The obligation of each
Lender to honor any Request for Credit Extension (other than a Committed Loan
Notice requesting only a conversion of Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:

          (a) The representations and warranties of the Borrower and each other
     Loan Party contained in Article V or any other Loan Document shall be true
     and correct in all material respects on and as of the date of such Credit
     Extension, except to the extent that

                                       73



     such representations and warranties specifically refer to an earlier date,
     in which case they shall be true and correct in all material respects as of
     such earlier date, and except that for purposes of this Section 4.02, the
     representations and warranties contained in Sections 5.05(a) and (b) shall
     be deemed to refer to the most recent statements furnished pursuant to
     Sections 6.01(a) and (b), respectively.

          (b) No Default shall exist, or would result from such proposed Credit
     Extension or from the application of the proceeds therefrom.

          (c) The Administrative Agent and, if applicable, the L/C Issuer or the
     Swing Line Lender shall have received a Request for Credit Extension in
     accordance with the requirements hereof.

          Each Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Loans to the other Type or a continuation of
Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

          Each of Holdings and the Borrower represents and warrants to the
Agents and the Lenders that:

          5.01 Existence, Qualification and Power; Compliance with Laws. Each
Loan Party and each of its Subsidiaries (a) is a Person duly organized or
formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, (b) has all requisite power and authority
to (i) own or lease its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents and the Merger
Agreement to which it is a party, (c) is duly qualified and in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, (d) is in
compliance with all Laws and (e) has all requisite governmental licenses,
authorizations, consents and approvals to operate its business as currently
conducted; except in each case referred to in clause (c), (d) or (e), to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

          5.02 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document and the Merger Agreement to
which such Person is a party, and the consummation of the Transaction, are
within such Loan Party's corporate or other powers, have been duly authorized by
all necessary corporate or other organizational action, and do not and will not
(a) contravene the terms of any of such Person's Organization Documents, (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under (other than as permitted by Section 7.01), or require any payment
(except for Indebtedness to be repaid on the Closing Date in connection with the
Transaction) to be made under (i) any Contractual Obligation to which such
Person is a party or affecting such Person or the properties of such Person or
any of its Subsidiaries or (ii) any order, injunction,

                                       74



writ or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (c) violate any Law; except with respect
to any breach or contravention or payment (but not creation of Liens) referred
to in clause (b)(i), to the extent that such conflict, breach, contravention or
payment could not reasonably be expected to have a Material Adverse Effect.

          5.03 Governmental Authorization; Other Consents. No material approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, or for the
consummation of the Transaction, (b) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents, (c) the perfection or
maintenance of the Liens created under the Collateral Documents (including the
priority thereof) or (d) the exercise by the Administrative Agent or any Lender
of its rights under the Loan Documents or the remedies in respect of the
Collateral pursuant to the Collateral Documents, except for the approvals,
consents, exemptions, authorizations, actions, notices and filings which have
been duly obtained, taken, given or made and are in full force and effect and,
in the case of the Transactions, those approvals, consents, exemptions,
authorizations or other actions, notices or filings, the failure of which to
obtain or make could not reasonably be expected to have a Material Adverse
Effect. All applicable waiting periods in connection with the Transaction have
expired without any action having been taken by any Governmental Authority
restraining, preventing or imposing materially adverse conditions upon the
Transaction. The Acquisition and the Mergers have been consummated in accordance
with the Merger Agreement and, in all material respects, applicable Law.

          5.04 Binding Effect. This Agreement and each other Loan Document has
been duly executed and delivered by each Loan Party that is party thereto. This
Agreement and each other Loan Document constitutes, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, except as such enforceability may be
limited by bankruptcy insolvency, reorganization, receivership, moratorium or
other laws affecting creditors' rights generally and by general principles of
equity.

          5.05 Financial Statements; No Material Adverse Effect. (a) The Audited
Financial Statements fairly present in all material respects the financial
condition of MFI and its consolidated Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein. During the period from December 31, 2002 to
and including the Closing Date, there has been (i) no sale, transfer or other
disposition by MFI or any of its consolidated Subsidiaries of any material part
of the business or property of MFI or any of its consolidated Subsidiaries,
taken as a whole, other than the Dairy Disposition and (ii) no purchase or other
acquisition by any of them of any business or property (including any Equity
Interests of any other Person) material in relation to the consolidated
financial condition of MFI or any of its consolidated Subsidiaries, taken as a
whole, in each case, which is not reflected in the foregoing financial
statements or in the notes thereto or has not otherwise been disclosed in
writing to the Lenders prior to the Closing Date.

                                       75



          (b) The unaudited consolidated financial statements of MFI and its
consolidated Subsidiaries for the fiscal quarters ended March 31, 2003, June 30,
2003 and September 30, 2003, and the related consolidated statements of income
or operations, shareholders' equity and cash flows for such fiscal quarters (i)
were prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and meet the
requirements of Regulation S-X under the Securities Act of 1933, as amended, and
all other accounting rules and regulations of the SEC promulgated thereunder
applicable to a registration statement under such Act on Form S-1, and (ii)
fairly present in all material respects the financial condition of MFI and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject to the absence of footnotes and to normal
year-end audit adjustments. From such date to the Closing Date, except as set
forth on Schedule 5.05, Holdings, MFI and their respective Subsidiaries have not
incurred any material Indebtedness and other liabilities, direct or contingent,
that, in accordance with GAAP, would be required to be disclosed in such
financial statements, other than in connection with the Transactions and which
are reflected in the pro forma financial statements delivered pursuant to clause
(d) below.

          (c) Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse Effect.

          (d) The (i) condensed consolidated pro forma balance sheet of MFI and
its Subsidiaries for the nine-month period ended September 30, 2003 and the
related consolidated pro forma statement of operations of MFI and its
Subsidiaries for the nine-month period then ended and (ii) the condensed
consolidated statement of operations of MFI and its Subsidiaries for the
twelve-month periods ended December 31, 2002 and September 30, 2003, certified
by the Chief Financial Officer of the Borrower, copies of which have been
furnished to each Lender, fairly present in all material respects the
consolidated pro forma financial condition of MFI and its Subsidiaries as at
such dates and the consolidated pro forma results of operations of MFI and its
Subsidiaries for the period ended on such date, in each case, giving pro forma
effect to the Transaction and the Dairy Disposition, all in accordance with GAAP
and meet the requirements of Regulation S-X under the Securities Act of 1933,
and all other accounting rules and regulations of the SEC promulgated thereunder
applicable to a registration statement under such Act on Form S-1.

          (e) The consolidated forecasted balance sheets, statements of income
and statements of cash flows of MFI and its Subsidiaries delivered to the
Lenders pursuant to Section 4.01 or 5.05 were prepared in good faith on the
basis of the assumptions stated therein, which assumptions were reasonable in
light of the conditions existing at the time of delivery of such forecasts; it
being understood that actual results may vary from such forecasts and that such
variations may be material.

          5.06 Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to this
Agreement, any other Loan Document or, as of the Closing Date, the consummation
of the

                                       76



Transaction, or (b) either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

          5.07 No Default. Neither the Borrower nor any Subsidiary is in default
under or with respect to, or a party to, any Contractual Obligation that could,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

          5.08 Ownership of Property; Liens. (a) Each Loan Party and each of its
Subsidiaries has good record and indefeasible title in fee simple to, or valid
leasehold interests in, all real property necessary in the ordinary conduct of
its business, free and clear of all Liens except for minor defects in title that
do not materially interfere with its ability to conduct its business or to
utilize such assets for their intended purposes and Liens permitted by Section
7.01.

          (b) Set forth on Schedule 5.08(b) hereto is a complete and accurate
list of all real property owned by any Loan Party or any of its Subsidiaries, as
of the Closing Date, showing as of the date hereof the street address (to the
extent available), county or other relevant jurisdiction, state and record
owner.

          (c) Set forth on Schedule 5.08(c) hereto is a complete and accurate
list of all leases of real property under which any Loan Party or any of its
Subsidiaries is the lessee as of the Closing Date, showing as of the date hereof
the street address (to the extent available), county or other relevant
jurisdiction, state, lessor and lessee.

          (d) Except as set forth in Schedule 5.08(b), Schedules 5.08(c) and
5.08(d), there are no other locations where any tangible personal property of
any of the Loan Parties is or may be located (other than vehicles and assets
temporarily in transit or sent for repair).

          5.09 Environmental Compliance. (a) There are no claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties that could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (b) Except as specifically disclosed in Schedule 5.09 or except as
could not reasonably be expected to have a Material Adverse Effect, (i) none of
the properties currently or formerly owned or operated by any Loan Party or any
of its Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any such
property; (ii) there are no and never have been any underground or aboveground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by any Loan Party or any of its
Subsidiaries or, to its knowledge, on any property formerly owned or operated by
any Loan Party or any of its Subsidiaries; (iii) there is no asbestos or
asbestos-containing material on any property currently owned or operated by any
Loan Party or any of its Subsidiaries; and (iv) Hazardous Materials have not
been released, discharged or disposed of on any property currently or formerly
owned or operated by any Loan Party or any of its Subsidiaries except for such
releases, discharges or disposal that were in material compliance with
Environmental Laws.

                                       77



          (c) The Properties do not contain any Hazardous Materials in amounts
or concentrations which (i) constitute, or constituted a violation of, (ii)
require remedial action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, remedial actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

          (d) Except as specifically disclosed in Schedule 5.09, neither the
Borrower nor any of its Subsidiaries is undertaking, and has not completed,
either individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law except
for such investigation or assessment or remedial or response action that, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect..

          (e) All Hazardous Materials generated, used, treated, handled or
stored at, or transported to or from, any property currently or formerly owned
or operated by any Loan Party or any of its Subsidiaries have been disposed of
in a manner not reasonably expected to result in material liability to any Loan
Party or any of its Subsidiaries.

          5.10 Insurance. The properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies, in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Borrower and its Subsidiaries) with such deductibles and covering such risks as
are customarily carried by prudent companies engaged in similar businesses and
owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.

          5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal
and material state and other tax returns and reports required to be filed, and
have paid all Federal and material state and other taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those (a) which are not
overdue by more than thirty (30) days or (b) which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP or (c) with respect to which
the failure to make such filing or payment could not reasonably be expected to
have a Material Adverse Effect.

          5.12 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal or
state Laws. Each Plan that is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of the Borrower and Holdings, nothing has
occurred which would prevent, or cause the loss of, such qualification. Each
Loan Party and each ERISA Affiliate have made all required contributions to each
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.

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          (b) There are no pending or, to the knowledge of the Borrower and
Holdings, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could be reasonably be expected to have
a Material Adverse Effect. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Effect.

          (c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has an "accumulated funding deficiency" (as defined
in Section 412 of the Code), whether or not waived, and no application for a
waiver of the minimum funding standard has been filed with respect to any
Pension Plan; (iii) neither any Loan Party nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Loan Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither any Loan Party nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA, except, with respect to each of the foregoing clauses of this Section
5.12(c), as could not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.

          5.13 Subsidiaries; Equity Interests. As of the Closing Date, each Loan
Party has no Subsidiaries other than those specifically disclosed in Schedule
5.13, and all of the outstanding Equity Interests in such Subsidiaries have been
validly issued, are fully paid and non-assessable and are owned by a Loan Party
free and clear of all Liens except (i) those created under the Collateral
Documents and (ii) any nonconsensual Lien that is permitted under Section 7.01.

          5.14 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act. (a) The Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of purchasing
or carrying margin stock (within the meaning of Regulation U issued by the FRB),
or extending credit for the purpose of purchasing or carrying margin stock and
no proceeds of any Borrowings or drawings under any Letter of Credit will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.

          (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940. Neither the making of any
Loan, nor the issuance of any Letters of Credit, nor the application of the
proceeds or repayment thereof by the Borrower, nor the consummation of the other
transactions contemplated by the Loan Documents, will violate any provision of
any such Act or any rule, regulation or order of the SEC thereunder.

          5.15 Disclosure. The Borrower has disclosed to the Agents and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries

                                       79



or any other Loan Party is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan
Party to any Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder
or any other Loan Document (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 materially misleading; provided,
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time of preparation; it being understood that
such projections may vary from actual results and that such variances may be
material.

          5.16 Compliance with Laws. Each Loan Party and its Subsidiaries is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

          5.17 Intellectual Property; Licenses, Etc. Each Loan Party and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, "IP Rights") that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person, except to the extent such
conflicts, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Set forth on Schedule 5.17 is a
complete and accurate list of all IP Rights owned or used by each Loan Party and
its Subsidiaries as of the Closing Date. To the knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by any Loan
Party or any Subsidiary infringes upon any rights held by any other Person
except for such infringements, individually or in the aggregate, which could not
reasonably be expected to have a Material Adverse Effect. No claim or litigation
regarding any of the foregoing is pending or, to the knowledge of the Borrower,
threatened, which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

          5.18 Solvency. The Loan Parties, on a consolidated basis, are Solvent.

          5.19 Casualty, Etc. Neither the business nor the properties of any
Loan Party or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect.

          5.20 Perfection, Etc. All filings and other actions necessary or
desirable to perfect and protect the Lien in the Collateral created under the
Collateral Documents have been

                                       80



duly made or taken or otherwise provided for in a manner reasonably acceptable
to Administrative Agent and are in full force and effect, and the Collateral
Documents create in favor of the Administrative Agent for the benefit of the
Secured Parties a valid and, together with such filings and other actions,
perfected first priority Lien in the Collateral, securing the payment of the
Secured Obligations, subject to Liens permitted by Section 7.01. The Loan
Parties are the legal and beneficial owners of the Collateral free and clear of
any Lien, except for the Liens created or permitted under the Loan Documents.

          5.21 Tax Shelter Regulations. The Borrower does not intend to treat
the Loans and/or Letters of Credit and related transactions as being a
"reportable transaction" (within the meaning of Treasury Regulation Section
1.6011-4). In the event the Borrower determines to take any action inconsistent
with such intention, it will promptly notify the Administrative Agent thereof.
If the Borrower so notifies the Administrative Agent, the Borrower acknowledges
that one or more of the Lenders may treat its Loans and/or its interest in Swing
Line Loans and/or Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such Treasury
Regulation.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, each of Holdings
and the Borrower shall, and shall (except in the case of the covenants set forth
in Sections 6.01, 6.02 and 6.03) cause each Subsidiary to:

          6.01 Financial Statements. Deliver to the Administrative Agent for
further distribution to each Lender, in form and detail reasonably satisfactory
to the Administrative Agent:

          (a) as soon as available, but in any event within ninety (90) days
     after the end of each fiscal year of the Borrower, a consolidated balance
     sheet of the Borrower and its Subsidiaries as at the end of such fiscal
     year, and the related consolidated statements of income or operations,
     shareholders' equity and cash flows for such fiscal year, setting forth in
     each case in comparative form the figures for the previous fiscal year, all
     in reasonable detail and prepared in accordance with GAAP, audited and
     accompanied by a report and opinion of PricewaterhouseCoopers or any other
     independent certified public accountant of nationally recognized standing,
     which report and opinion shall be prepared in accordance with generally
     accepted auditing standards and shall not be subject to any "going concern"
     or like qualification or exception or any qualification or exception as to
     the scope of such audit;

          (b) as soon as available, but in any event within forty-five (45) days
     after the end of each of the first three (3) fiscal quarters of each fiscal
     year of the Borrower, a consolidated balance sheet of the Borrower and its
     Subsidiaries as at the end of such fiscal quarter, and the related
     consolidated statements of income or operations,

                                       81



     shareholders' equity and cash flows for such fiscal quarter and for the
     portion of the fiscal year then ended, setting forth in each case in
     comparative form the figures for the corresponding fiscal quarter of the
     previous fiscal year and the corresponding portion of the previous fiscal
     year, all in reasonable detail and certified by a Responsible Officer of
     the Borrower as fairly presenting in all material respects the financial
     condition, results of operations, shareholders' equity and cash flows of
     the Borrower and its Subsidiaries in accordance with GAAP, subject only to
     normal year-end audit adjustments and the absence of footnotes;

          (c) at the time of delivery of the financial statements provided for
     in Sections 6.01(a) and (b) above, divisional income statements for the egg
     products division, the potato products division and the refrigerated
     distribution division prepared in accordance with past practices; and

          (d) as soon as available, but in any event no later than forty-five
     (45) days after the end of each fiscal year, forecasts prepared by
     management of the Borrower, in form reasonably satisfactory to the
     Administrative Agent, of consolidated balance sheets, income statements and
     cash flow statements of the Borrower and its Subsidiaries on a quarterly
     basis for the remaining portion of the fiscal year following such fiscal
     year then ended.

          6.02 Certificates; Other Information. Deliver to the Administrative
Agent for further distribution to each Lender, in form and detail reasonably
satisfactory to the Administrative Agent and the Required Lenders:

          (a) no later than five (5) days after the delivery of the financial
     statements referred to in Section 6.01(a), a certificate of its independent
     certified public accountants certifying such financial statements and
     stating that in making the examination necessary therefor no knowledge was
     obtained of any Event of Default under Section 7.11 or, if any such Event
     of Default shall exist, stating the nature and status of such event;

          (b) no later than five (5) days after the delivery of the financial
     statements referred to in Sections 6.01(a) and (b), a duly completed
     Compliance Certificate signed by a Responsible Officer of the Borrower and,
     if such Compliance Certificate demonstrates an Event of Default of any
     covenant under Section 7.11, the Equity Investors may deliver, together
     with such Compliance Certificate, notice of their intent to cure (a "Notice
     of Intent to Cure") such Event of Default through capital contributions or
     the purchase of Equity Interests as contemplated pursuant to clause
     (b)(xxii) and the final proviso of the definition of "Consolidated EBITDA";
     provided, that the delivery of a Notice of Intent to Cure shall in no way
     affect or alter the occurrence, existence or continuation of any such Event
     of Default or the rights, benefits, powers and remedies of the
     Administrative Agent and the Lenders under any Loan Document;

          (c) promptly after the same are available, copies of each annual
     report, proxy or financial statement or other report or communication sent
     to the stockholders of the Borrower, and copies of all annual, regular,
     periodic and special reports and registration statements which the Borrower
     may file or be required to file, copies of any report, filing

                                       82



     or communication with the SEC under Section 13 or 15(d) of the Securities
     Exchange Act of 1934, or with any Governmental Authority that may be
     substituted therefor, or with any national securities exchange, and in any
     case not otherwise required to be delivered to the Administrative Agent
     pursuant hereto;

          (d) promptly after the furnishing thereof, copies of any requests or
     notices received by any Loan Party (other than in the ordinary course of
     business), statement or report furnished to any holder of debt securities
     of any Loan Party or of any of its Subsidiaries pursuant to the terms of
     any Junior Financing Documentation in a principal amount greater than the
     Threshold Amount and not otherwise required to be furnished to the Lenders
     pursuant to any other clause of this Section 6.02;

          (e) promptly after the receipt thereof by any Loan Party or any of its
     Subsidiaries, copies of each notice or other correspondence received from
     the SEC (or comparable agency in any applicable non-U.S. jurisdiction)
     concerning any material investigation or other material inquiry by such
     agency regarding financial or other operational results of any Loan Party
     or any of its Subsidiaries;

          (f) promptly after the assertion or occurrence thereof, notice of any
     environmental action against or of any noncompliance by any Loan Party or
     any of its Subsidiaries with any Environmental Law or Environmental Permit
     that could reasonably be expected to have a Material Adverse Effect;

          (g) together with the delivery of each Compliance Certificate pursuant
     to Section 6.02(b), (i) a report supplementing Schedule 5.17 and Schedules
     5.08(b), 5.08(c) and 5.08(d) hereto, including, in the case of supplements
     to Schedules 5.08(b), 5.08(c) and 5.08(d), an identification of all owned
     and leased real property disposed of by any Loan Party or any of its
     Subsidiaries since the delivery of the last supplements and a list and
     description of all real property acquired or leased since the delivery of
     the last supplements (including the street address (if available), county
     or other relevant jurisdiction, state, and (A) in the case of the owned
     real property, the record owner and (B) in the case of leases of property,
     lessor and lessee), and (ii) a description of each event, condition or
     circumstance during the last fiscal quarter covered by such Compliance
     Certificate requiring a mandatory prepayment under Section 2.05(b);

          (h) promptly after the furnishing thereof, copies of all financial
     statements, forecasts, budgets or other similar information of Holdings
     furnished to the lenders or holders of any Permitted Holdco Debt;

          (i) promptly after the Borrower has notified the Administrative Agent
     of any intention by the Borrower to treat the Loans and/or Letters of
     Credit and related transactions as being a "reportable transaction" (within
     the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy
     of IRS Form 8886 or any successor form; and

          (j) promptly, such additional information regarding the business,
     legal, financial or corporate affairs of any Loan Party or any Subsidiary,
     or compliance with the

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     terms of the Loan Documents, as the Administrative Agent or any Lender may
     from time to time reasonably request.

          Documents required to be delivered pursuant to Section 6.01(a) or (b)
or Section 6.02(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower's
website on the Internet at the website address listed on Schedule 10.02; or (ii)
on which such documents are posted on the Borrower's behalf on
IntraLinks/IntraAgency or another relevant website, if any, to which each Lender
and the Administrative Agent have access (whether a commercial, third-party
website or whether sponsored by the Administrative Agent); provided, that: (i)
the Borrower shall deliver paper copies of such documents to the Administrative
Agent for further distribution to each Lender until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and
(ii) the Borrower shall notify (which may be by facsimile or electronic mail)
the Administrative Agent of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents. Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(b) to the Administrative Agent. Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

          6.03 Notices. Promptly notify the Administrative Agent and each
Lender:

          (a) of the occurrence of any Default; and

          (b) of any matter that has resulted or could reasonably be expected to
     result in a Material Adverse Effect, including arising out of or resulting
     from (i) breach or non-performance of, or any default under, a Contractual
     Obligation of any Loan Party or any Subsidiary, (ii) any dispute,
     litigation, investigation, proceeding or suspension between any Loan Party
     or any Subsidiary and any Governmental Authority (including in connection
     with any Food Industry Laws), (iii) the commencement of, or any material
     development in, any litigation or proceeding affecting any Loan Party or
     any Subsidiary, including pursuant to any applicable Environmental Laws and
     or in respect of IP Rights, or (iv) the occurrence of any ERISA Event.

          Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to Section
6.03(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.

          6.04 Payment of Obligations. Pay, discharge or otherwise satisfy as
the same shall become due and payable, all its obligations and
liabilities,including (a) all tax liabilities,

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assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property; and (c) all
Indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such Indebtedness
except, in each case, to the extent the failure to pay or discharge the same
could not reasonably be expected to have a Material Adverse Effect.

          6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain
in full force and effect its legal existence under the Laws of the jurisdiction
of its organization except in a transaction permitted by Section 7.04 or 7.05;
provided, however, that the Borrower and its Subsidiaries may consummate the
Acquisition and the Mergers, (b) take all reasonable action to maintain all
rights, privileges (including its good standing), permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect, and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

          6.06 Maintenance of Properties. (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order, repair and condition, ordinary wear and tear
excepted and casualty or condemnation excepted, and (b) make all necessary
renewals, replacements, modifications, improvements, upgrades, extensions and
additions thereof or thereto in accordance with prudent industry practice.

          6.07 Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Borrower and its Subsidiaries) as are customarily carried under similar
circumstances by such other Persons.

          6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except if the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

          6.09 Books and Records. Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower or such Subsidiary, as the case may be.

          6.10 Inspection Rights. Permit representatives and independent
contractors of the Administrative Agent and each Lender to visit and inspect any
of its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom,

                                       85



and to discuss its affairs, finances and accounts with its directors, officers,
and independent public accountants, all at the expense of the Borrower and at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
that, excluding any such visits and inspections during the continuation of an
Event of Default, only the Administrative Agent on behalf of the Lenders may
exercise rights under this Section 6.10 and the Administrative Agent shall not
exercise such rights more often than two times during any calendar year absent
the existence of an Event of Default and only one (1) such time shall be at the
Borrower's expense; provided, further that when an Event of Default exists the
Administrative Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and without advance notice.
The Administrative Agent and the Lenders shall give the Borrower the opportunity
to participate in any discussions with the Borrower's accountants.

          6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for
general corporate purposes not in contravention of any Law or of any Loan
Document.

          6.12 Covenant to Guarantee Obligations and Give Security. (a) Upon the
formation or acquisition of any new direct or indirect Subsidiaries by any Loan
Party or the acquisition of any personal property or fee owned real property
with a value in excess of $2,000,000 by any Loan Party, and such personal
property, in the reasonable judgment of the Administrative Agent, shall not
already be subject to a perfected Lien in favor of the Administrative Agent for
the benefit of the Secured Parties, then the Borrower shall, in each case at the
Borrower's expense:

          (i) in connection with the formation or acquisition of a Subsidiary,
     within thirty (30) days after such formation or acquisition or such longer
     period, not to exceed an additional thirty (30) days, as the Administrative
     Agent may agree in its sole discretion, (A) cause each such Subsidiary that
     is not a Foreign Subsidiary, and cause each direct and indirect parent of
     such Subsidiary (if it has not already done so), to duly execute and
     deliver to the Administrative Agent a guaranty or guaranty supplement, in
     form and substance reasonably satisfactory to the Administrative Agent,
     guaranteeing the other Loan Parties' obligations under the Loan Documents,
     and (B) deliver (or cause such direct and indirect parent to deliver)
     certificates representing the Pledged Interests of such Subsidiary
     accompanied by undated stock powers or other appropriate instruments of
     transfer executed in blank and instruments evidencing the Pledged Debt of
     such Subsidiary indorsed in blank to the Administrative Agent, together
     with, if requested by the Administrative Agent, supplements to the Security
     Agreement with respect to the pledge of any Equity Interests or
     Indebtedness; provided, that only 65% of Equity Interests of any Foreign
     Subsidiary shall be required to be pledged as Collateral.

          (ii) within ten (10) days after such request, formation or
     acquisition, or such longer period, not to exceed an additional thirty (30)
     days, as the Administrative Agent may agree, furnish to the Administrative
     Agent a description of the real and personal properties of the Loan Parties
     and their respective Subsidiaries in detail reasonably satisfactory to the
     Administrative Agent,

                                       86



          (iii) within thirty (30) days after such request, formation or
     acquisition, or such longer period, not to exceed an additional sixty (60)
     days, as the Administrative Agent may agree in its sole discretion, duly
     execute and deliver, and cause each such Subsidiary that is not a Foreign
     Subsidiary to duly execute and deliver, to the Administrative Agent
     Mortgages, Security Agreement Supplements, IP Security Agreement
     Supplements and other security agreements, as specified by and in form and
     substance reasonably satisfactory to the Administrative Agent (consistent
     with the Security Agreement, IP Security Agreement and Mortgages), securing
     payment of all the Obligations of the applicable Loan Party or such
     Subsidiary, as the case may be, under the Loan Documents and constituting
     Liens on all such properties,

          (iv) within thirty (30) days after such request, formation or
     acquisition, or such longer period, not to exceed an additional sixty (60)
     days, as the Administrative Agent may agree in its sole discretion, take,
     and cause such Subsidiary that is not a Foreign Subsidiary or such parent
     to take, whatever action (including, without limitation, the recording of
     Mortgages, the filing of Uniform Commercial Code financing statements, the
     giving of notices and the endorsement of notices on title documents and
     delivery of stock and membership interest certificates) may be necessary or
     advisable in the reasonable opinion of the Administrative Agent to vest in
     the Administrative Agent (or in any representative of the Administrative
     Agent designated by it) valid and subsisting Liens on the properties
     purported to be subject to the Mortgages, Security Agreement Supplements,
     IP Security Agreement Supplements and security agreements delivered
     pursuant to this Section 6.12, enforceable against all third parties in
     accordance with their terms,

          (v) within thirty (30) days after the request of the Administrative
     Agent, deliver to the Administrative Agent, a signed copy of an opinion,
     addressed to the Administrative Agent and the other Secured Parties, of
     counsel for the Loan Parties reasonably acceptable to the Administrative
     Agent as to such matters as the Administrative Agent may reasonably
     request,

          (vi) as promptly as practicable after the request of the
     Administrative Agent, to the Administrative Agent with respect to each
     parcel of real property owned or held by a Subsidiary that is not a Foreign
     Subsidiary that is the subject of such request, title reports in scope,
     form and substance reasonably satisfactory to the Administrative Agent and,
     to the extent available, surveys and environmental assessment reports,
     each, and

          (vii) at any time and from time to time, promptly execute and deliver
     any and all further instruments and documents and take all such other
     action as the Administrative Agent in its reasonable judgment may deem
     necessary or desirable in obtaining the full benefits of, or in perfecting
     and preserving the Liens of, such guaranties, Mortgages, Security Agreement
     Supplements, IP Security Agreement Supplements and security agreements; and

          (b) Notwithstanding the foregoing, the Administrative Agent shall not
take a security interest in those assets as to which the Administrative Agent
shall determine, in its reasonable discretion, that the cost of obtaining such
Lien (including any mortgage, stamp,

                                       87



intangibles or other tax) are excessive in relation to the benefit to the
Lenders of the security afforded thereby.

          6.13 Compliance with Environmental Laws. Except, in each case, to the
extent that the failure to do so could reasonably be expected to have a Material
Adverse Effect, comply, and cause all lessees and other Persons operating or
occupying its properties to comply, in all material respects, with all
applicable Environmental Laws and Environmental Permits; obtain and renew all
Environmental Permits necessary for its operations and properties; and conduct
any investigation, study, sampling and testing, and undertake any cleanup,
removal, remedial or other action necessary to remove and clean up all Hazardous
Materials from any of its properties, in accordance with the requirements of all
Environmental Laws.

          6.14 Further Assurances. (a) Promptly upon request by the
Administrative Agent, or any Lender through the Administrative Agent, (i)
correct any material defect or error that may be discovered in the execution,
acknowledgment, filing or recordation of any Loan Document or other document or
instrument relating to any Collateral, and (ii) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, certificates, assurances and other instruments as the
Administrative Agent, or any Lender through the Administrative Agent, may
reasonably require from time to time in order to carry out more effectively the
purposes of the Loan Documents.

          (b) By the date that is forty-five (45) days after the Closing Date,
     as such time period may be extended, not to exceed an additional forty-five
     (45) days, in the Administrative Agent's sole discretion, the Borrower
     shall deliver the Mortgages covering the Real Properties duly executed by
     the appropriate Loan Party, together with:

          (i) evidence that counterparts of the Mortgages have been duly
     executed, acknowledged and delivered and are in form suitable for filing or
     recording in all filing or recording offices that the Administrative Agent
     may deem reasonably necessary or desirable in order to create a valid and
     subsisting perfected Lien on the property described therein in favor of the
     Administrative Agent for the benefit of the Secured Parties and that all
     filing and recording taxes and fees have been paid or otherwise provided
     for in a manner reasonably satisfactory to the Administrative Agent;

          (ii) fully paid American Land Title Association Lender's Extended
     Coverage title insurance policies or the equivalent or other form available
     in each applicable jurisdiction (the "Mortgage Policies") in form and
     substance, with endorsements and in amount, reasonably acceptable to the
     Administrative Agent (not to exceed the value of the Real Properties
     covered thereby), issued, coinsured and reinsured by title insurers
     reasonably acceptable to the Administrative Agent, insuring the Mortgages
     to be valid subsisting Liens on the property described therein, free and
     clear of all defects and encumbrances, subject to Liens permitted by
     Section 7.01, and providing for such other affirmative insurance (including
     endorsements for future advances under the Loan Documents) and such
     coinsurance and direct access reinsurance as the Administrative Agent may
     deem reasonably necessary or desirable;

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          (iii) American Land Title Association/American Congress on Surveying
     and Mapping form surveys (to the extent available);

          (iv) opinions of local counsel for the Loan Parties in states in which
     the Real Properties are located, with respect to the enforceability and
     perfection of the Mortgages and any related fixture filings substantially
     in the form of Exhibit J-3 hereto, and otherwise in form and substance
     reasonably satisfactory to the Administrative Agent; and

          (v) such other evidence that all other actions that the Administrative
     Agent may deem necessary or desirable in order to create valid and
     subsisting Liens on the property described in the Mortgages has been taken.

          6.15 Interest Rate Hedging. Enter into prior to sixty (60) days
following the Closing Date, and maintain at all times thereafter until the third
anniversary date of the Closing Date, protection against fluctuations in
interest rates pursuant to, as of such time, Eurodollar Rate Loans under this
Agreement having twelve (12) month Interest Periods and, thereafter, one or more
interest rate Swap Contracts with Persons reasonably acceptable to the
Administrative Agent and providing coverage in a notional amount, together with
the amount of Funded Debt of Holdings and its Subsidiaries on a consolidated
basis that is bearing interest at a fixed rate, at least equal to 50% of the
aggregate amount of all Funded Debt of Holdings and its Subsidiaries on a
consolidated basis.

                                  Article VII
                               NEGATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, Holdings and the
Borrower shall not, nor shall they permit any of their Subsidiaries to, directly
or indirectly:

          7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired, or
sign or file or authorize the filing under the Uniform Commercial Code of any
jurisdiction a financing statement that names the Borrower or any of its
Subsidiaries as debtor, or sign any security agreement authorizing any secured
party thereunder to file such financing statement, other than the following:

          (a) Liens pursuant to any Loan Document;

          (b) Liens existing on the date hereof and listed on Schedule 7.01 and
     any modifications, replacements, renewals or extensions thereof; provided,
     that (i) the Lien does not extend to any additional property other than (A)
     after-acquired property that is affixed or incorporated into the property
     covered by such Lien or financed by Indebtedness permitted under Section
     7.03, and (B) and proceeds and products thereof and (ii) the renewal,
     extension or refinancing of the obligations secured or benefited by such
     Liens is permitted by Section 7.03;

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          (c) Liens for taxes, assessments or governmental charges which are not
     overdue for a period of more than thirty (30) days or which are being
     contested in good faith and by appropriate proceedings diligently
     conducted, if adequate reserves with respect thereto are maintained on the
     books of the applicable Person in accordance with GAAP;

          (d) statutory Liens of landlords, carriers, warehousemen, mechanics,
     materialmen, repairmen or other like Liens arising in the ordinary course
     of business which secure amounts not overdue for a period of more than
     thirty (30) days or if more than thirty (30) days overdue, are unfiled and
     no other action has been taken to enforce such Lien or which are being
     contested in good faith and by appropriate proceedings diligently
     conducted, if adequate reserves with respect thereto are maintained on the
     books of the applicable Person;

          (e) pledges or deposits in the ordinary course of business in
     connection with workers' compensation, unemployment insurance and other
     social security legislation, other than any Lien imposed by ERISA;

          (f) deposits to secure the performance of bids, trade contracts,
     governmental contracts and leases (other than Indebtedness for borrowed
     money), statutory obligations, surety, stay, customs and appeal bonds,
     performance bonds and other obligations of a like nature incurred in the
     ordinary course of business;

          (g) easements, rights-of-way, restrictions, encroachments, protrusions
     and other similar encumbrances and minor title defects affecting real
     property which, in the aggregate, do not in any case materially interfere
     with the ordinary conduct of the business of the applicable Person;

          (h) Liens securing judgments for the payment of money not constituting
     an Event of Default under Section 8.01(h);

          (i) Liens securing Indebtedness permitted under Sections 7.03(b)(v)
     and (b)(xv); provided, that (i) such Liens attach concurrently with or
     within one hundred and twenty (120) days after the acquisition, repair,
     replacement or improvement (as applicable) of the property subject to such
     Liens, (ii) such Liens do not at any time encumber any property other than
     the property financed by such Indebtedness and the proceeds and the
     products thereof and (iii) with respect to Capitalized Leases, such Liens
     do not at any time extend to or cover any assets other than the assets
     subject to such Capitalized Leases;

          (j) Liens arising from operation of the statutory trust under PACA or
     MWPDA or any comparable law, statute or regulation applicable to the
     Borrower and its Subsidiaries and their respective operations based on
     their businesses; provided, that such Liens do not secure past due account
     payable balances exceeding $10,000,000 in the aggregate at any one time
     outstanding, unless, in respect of any such account payables, (i)
     appropriate legal or administrative action has been commenced and is being
     diligently pursued or defended by the Borrower or the applicable Subsidiary
     and (ii) the ability of

                                       90



     the applicable vendor to enforce any such Lien provided under PACA or MWPDA
     has been stayed or otherwise legally prohibited during the pendency of such
     action;

          (k) Liens on "farm products" (as defined in the Food Security Act) to
     the extent, in the case of any such Lien, that such Lien (i) was created by
     the Person (but not Holdings or any of its Subsidiaries) which sold such
     property to the Borrower or any of its Subsidiaries and (ii) follows the
     property solely by reason of the provisions of the Food Security Act
     notwithstanding the transfer of title to such property to the Borrower or
     any of its Subsidiaries;

          (l) leases, licenses, subleases or sublicenses granted to others in
     the ordinary course of business and not interfering in any material respect
     with the business of the Borrower or any of its material Subsidiaries;

          (m) Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of customs duties in connection with the
     importation of goods in the ordinary course of business;

          (n) Liens (i) of a collection bank arising under Section 4-210 of the
     Uniform Commercial Code on items in the course of collection, (ii)
     attaching to commodity trading accounts or other commodities brokerage
     accounts incurred in the ordinary course of business; and (iii) in favor of
     a banking institution arising as a matter of law encumbering deposits
     (including the right of set-off) and which are within the general
     parameters customary in the banking industry;

          (o) Liens (i) on cash advances in favor of the seller of any property
     to be acquired in an Investment permitted pursuant to Sections 7.02(i) and
     (o) to be applied against the purchase price for such Investment, and (ii)
     consisting of an agreement to Dispose of any property in a Disposition
     permitted under Section 7.05, in each case, solely to the extent such
     Investment or Disposition, as the case may be, would have been permitted on
     the date of the creation of such Lien;

          (p) Liens on property of any Foreign Subsidiary securing Indebtedness
     of such Foreign Subsidiary to the extent permitted under Section
     7.03(b)(vi) or (b)(vii);

          (q) Liens in favor of the Borrower or a Subsidiary of the Borrower
     securing Indebtedness permitted under Section 7.03(b)(iv);

          (r) Liens existing on property at the time of its acquisition or
     existing on the property of any Person that becomes a Subsidiary after the
     date hereof (other than Liens on the Equity Interests of any Person that
     becomes a Subsidiary); provided, that (i) such Lien was not created in
     contemplation of such acquisition or such Person becoming a Subsidiary,
     (ii) such Lien does not extend to or cover any other assets or property
     (other than the proceeds or products thereof), and (iii) the Indebtedness
     secured thereby is permitted under Section 7.03(b)(v), (ix), or (xii);

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          (s) Liens arising from precautionary UCC financing statement filings
     regarding leases entered into by the Borrower or any of its Subsidiaries in
     the ordinary course of business;

          (t) any interest or title of a lessor, sublessor, licensee,
     sublicensee, licensor or sublicensor under any lease or license agreement
     in the ordinary course of business permitted by this Agreement;

          (u) Liens arising out of conditional sale, title retention,
     consignment or similar arrangements for sale of goods entered into by the
     Borrower or any of its Subsidiaries in the ordinary course of business
     permitted by this Agreement;

          (v) Liens deemed to exist in connection with Investments in repurchase
     agreements under Section 7.02;

          (w) Liens encumbering reasonable customary initial deposits and margin
     deposits and similar Liens attaching to commodity trading accounts or other
     brokerage accounts incurred in the ordinary course of business and not for
     speculative purposes;

          (x) Permitted Encumbrances; and

          (y) other Liens securing Indebtedness outstanding in an aggregate
     principal amount not to exceed $20,000,000.

          7.02 Investments. Make or hold any Investments, except:

          (a) Investments held by the Borrower or such Subsidiary in the form of
     Cash Equivalents;

          (b) loans or advances to officers, directors and employees of the
     Borrower and Subsidiaries (i) in an aggregate amount not to exceed
     $3,500,000 at any time outstanding, for travel, entertainment, relocation
     and analogous ordinary business purposes, and (ii) in connection with such
     Person's purchase of Equity Interests of Holdings or Investors LLC in an
     aggregate amount not to exceed $2,000,000;

          (c) Investments (i) by Holdings or any of its Subsidiaries in any Loan
     Party (including any new Subsidiary which becomes a Loan Party), and (ii)
     by any Subsidiary of Holdings that is not a Loan Party in any other such
     Subsidiary that is also not a Loan Party;

          (d) Investments consisting of extensions of credit in the nature of
     accounts receivable or notes receivable arising from the grant of trade
     credit in the ordinary course of business, and Investments received in
     satisfaction or partial satisfaction thereof from financially troubled
     account debtors;

          (e) Investments arising out of transactions permitted under Sections
     7.01, 7.03, 7.04, 7.05 and 7.06;

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          (f) Investments existing on the date hereof and set forth on Schedule
     7.02 and any modification, replacement, renewal or extension thereof;
     provided, that the amount of the original Investment is not increased
     except by the terms of such Investment or as otherwise permitted by this
     Section 7.02;

          (g) Investments in Swap Contracts permitted under Section 7.03;

          (h) promissory notes and other non-cash consideration received in
     connection with Dispositions permitted by Section 7.05;

          (i) the purchase or other acquisition of all or substantially all of
     the property and assets or business of, any Person or of assets
     constituting a business unit, a line of business or division of such
     Person, or of all of the Equity Interests in a Person that, upon the
     consummation thereof, will be wholly owned directly by the Borrower or one
     or more of its wholly owned Subsidiaries (including, without limitation, as
     a result of a merger or consolidation); provided, that, with respect to
     each purchase or other acquisition made pursuant to this Section 7.02(i)
     (each, a "Permitted Acquisition"):

               (A) each applicable Loan Party and any such newly created or
          acquired Subsidiary shall have complied with the requirements of
          Section 6.12;

               (B) the total cash and noncash consideration (including, without
          limitation, the fair market value of all Equity Interests issued or
          transferred to the sellers thereof, earnouts and other contingent
          payment obligations to such sellers and all assumptions of
          Indebtedness in connection therewith, but excluding any Excluded
          Consideration) paid by or on behalf of the Borrower and its
          Subsidiaries for any such purchase or other acquisition, when
          aggregated with the total cash and noncash consideration paid by or on
          behalf of the Borrower and its Subsidiaries for all other purchases
          and other acquisitions made by the Borrower and its Subsidiaries
          pursuant to this Section 7.02(i), shall not exceed $100,000,000;

               (C) (1) immediately before and immediately after giving Pro Forma
          Effect to any such purchase or other acquisition, no Default shall
          have occurred and be continuing and (2) immediately after giving
          effect to such purchase or other acquisition, (x) Holdings and its
          Subsidiaries shall be in Pro Forma Compliance with all of the
          covenants set forth in Section 7.11, such compliance to be determined
          on the basis of the financial information most recently delivered to
          the Administrative Agent and the Lenders pursuant to Section 6.01(a)
          or (b) as though such purchase or other acquisition had been
          consummated as of the first day of the fiscal period covered thereby
          and evidenced by a certificate from the Chief Financial Officer of the
          Borrower demonstrating such compliance calculation in reasonable
          detail, (y) at least $25,000,000 of the Revolving Credit Facility
          shall be available for the borrowing of Revolving Credit Loans; and

               (D) the Borrower shall have delivered to the Administrative
          Agent, on behalf of the Lenders, at least one (1) Business Day prior
          to the date on which any

                                       93



          such purchase or other acquisition is to be consummated, a certificate
          of a Responsible Officer, in form and substance reasonably
          satisfactory to the Administrative Agent, certifying that all of the
          requirements set forth in this clause (i) have been satisfied or will
          be satisfied on or prior to the consummation of such purchase or other
          acquisition;

          (j) the Acquisition and the Mergers;

          (k) Investments in the ordinary course of business consisting of (i)
     endorsements for collection or deposit and (ii) customary trade
     arrangements with customers consistent with past practices;

          (l) Investments (including debt obligations and Equity Interests)
     received in connection with the bankruptcy or reorganization of suppliers
     and customers and in settlement of delinquent obligations of, and other
     disputes with, customers and suppliers arising in the ordinary course of
     business and upon the foreclosure with respect to any secured Investment or
     other transfer of title with respect to any secured Investment;

          (m) the licensing, sublicensing or contribution of IP Rights pursuant
     to joint marketing arrangements with Persons other than Holdings and its
     Subsidiaries;

          (n) loans and advances to Holdings in lieu of, and not in excess of
     the amount of (after giving effect to any other loans, advances or
     Restricted Payments in respect thereof), Restricted Payments to the extent
     permitted to be made to Holdings in accordance with Section 7.06; and

          (o) so long as immediately after giving effect to any such Investment,
     (i) no Event of Default has occurred and is continuing and (ii) at least
     $25,000,000 of the Revolving Credit Facility shall be available for the
     borrowing of Revolving Credit Loans, other Investments not exceeding
     $65,000,000 in the aggregate in any fiscal year of the Borrower; provided,
     however, that, such amount may be increased by the sum of (A) the Net Cash
     Proceeds of Permitted Subordinated Indebtedness and (B) Permitted Equity
     Issuances in an aggregate amount not to exceed $75,000,000; provided,
     further, that, to the extent that any such Investment (or series of related
     Investments) made pursuant to this clause (o) consists of the
     contribution(s) or other transfer(s) of property (other than cash) having
     an aggregate net book value in excess of $5,000,000 to a Joint Venture for
     consideration less than the fair market value of such property, then the
     Borrower shall have delivered to the Administrative Agent a pro forma
     Compliance Certificate demonstrating that, upon after giving Pro Forma
     Effect to such Investment(s), the Loan Parties would be in compliance with
     the financial covenants set forth in Section 7.11.

          7.03 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:

          (a) in the case of the Borrower:

               (i) Indebtedness in respect of Swap Contracts designed to hedge
          against fluctuations in interest rates, foreign exchange rates or
          commodities

                                       94



          pricing risks incurred in the ordinary course of business and
          consistent with prudent business practice and not for speculative
          purposes;

               (ii) Indebtedness evidenced by the Senior Subordinated Notes and
          any Permitted Refinancing thereof;

               (iii) Indebtedness evidenced by the Existing Notes remaining
          outstanding after giving effect to the consummation of the Existing
          Notes Tender Offer;

               (iv) Indebtedness evidenced by the Senior Unsecured Term Loans
          and any Permitted Refinancing thereof; and

               (v) Permitted Subordinated Indebtedness (A) in an aggregate
          amount not to exceed $25,000,000 at any time outstanding, and (B) in
          an aggregate amount in excess of $25,000,000 solely to the extent that
          such excess amounts are applied to prepay the Loans pursuant to
          Section 2.05(b)(iv);

          (b) in the case of the Borrower and its Subsidiaries:

               (i) Indebtedness of the Loan Parties under the Loan Documents;

               (ii) Indebtedness outstanding on the date hereof and listed on
          Schedule 7.03 and any modifications, refinancings, refundings,
          renewals or extensions thereof; provided, that (A) the amount of such
          Indebtedness is not increased at the time of such modification,
          refinancing, refunding, renewal or extension except by an amount equal
          to a reasonable premium or other reasonable amount paid, and fees and
          expenses reasonably incurred, in connection with such refinancing and
          by an amount equal to any existing commitments unutilized thereunder
          or as otherwise permitted pursuant to this Section 7.03, and (B) the
          terms and conditions (including, if applicable, as to collateral and
          subordination) of any such modified, extending, refunding or
          refinancing Indebtedness are not materially less favorable to the Loan
          Parties or the Lenders than the terms and conditions of the
          Indebtedness being modified, extended, refunded or refinanced;

               (iii) Guarantees of the Borrower and its Subsidiaries in respect
          of Indebtedness of the Borrower or such Subsidiary otherwise permitted
          hereunder;

               (iv) Indebtedness of (A) any Loan Party owing to any other Loan
          Party, (B) of any Subsidiary of the Borrower that is not a Loan Party
          owed to (1) any other Subsidiary of Holdings that is not a Loan Party
          or (2) Holdings or a Loan Party in respect of an Investment permitted
          under Section 7.02(c) or Section 7.02(o), and (C) of any Loan Party to
          any Subsidiary of Holdings which is not a Loan Party; provided, that
          all such Indebtedness of any Loan Party in this clause (iv)(C) must be
          expressly subordinated to the Obligations;

               (v) Attributable Indebtedness and purchase money obligations
          (including obligations in respect of mortgage, industrial revenue
          bond, industrial

                                       95



          development bond and similar financings) to finance the purchase,
          repair or improvement of fixed or capital assets within the
          limitations set forth in Section 7.01(i); provided, however, that the
          aggregate amount of all such Indebtedness at any one time outstanding
          shall not exceed $20,000,000;

               (vi) Indebtedness of Foreign Subsidiaries in an aggregate
          principal amount at any time outstanding for all such Persons taken
          together not exceeding $20,000,000;

               (vii) Indebtedness in respect of Swap Contracts designed to hedge
          against foreign exchange rates or commodities pricing risks incurred
          in the ordinary course of business and not for speculative purposes;

               (viii) Indebtedness (other than for borrowed money) subject to
          Liens permitted under Section 7.01;

               (ix) Indebtedness of the Borrower and its Subsidiaries (A)
          assumed in connection with any Permitted Acquisition or (B) owed to
          the seller of any property acquired in a Permitted Acquisition on an
          unsecured subordinated basis, in each case, so long as both
          immediately prior and after giving effect thereto, (x) no Event of
          Default shall exist or result therefrom, and (y) Holdings and its
          Subsidiaries will be in Pro Forma Compliance with the covenants set
          forth in Section 7.11, after giving effect to such Permitted
          Acquisition and the incurrence or issuance of such Indebtedness and
          any Permitted Refinancing thereof;

               (x) Indebtedness representing deferred compensation to employees
          of the Borrower and its Subsidiaries;

               (xi) Indebtedness consisting of promissory notes issued by any
          Loan Party to current or former officers, directors and employees,
          their respective estates, spouses or former spouses to finance the
          purchase or redemption of Equity Interests of Holdings or Investors
          LLC permitted by Section 7.06;

               (xii) Indebtedness incurred by the Borrower or its Subsidiaries
          in a Permitted Acquisition or Disposition under agreements providing
          for the adjustment of the purchase price or similar adjustments;

               (xiii) Indebtedness consisting of obligations of the Borrower or
          its Subsidiaries under deferred compensation or other similar
          arrangements incurred by such Person in connection with the
          Transaction and Permitted Acquisitions in an aggregate amount not to
          exceed $5,000,000;

               (xiv) Indebtedness in respect of netting services, overdraft
          protections and similar arrangements in each case in connection with
          deposit accounts; and

               (xv) Indebtedness in an aggregate principal amount not to exceed
          $20,000,000 at any time outstanding.

                                       96



          (c) in the case of the Holdings:

               (i) Indebtedness under the Loan Documents;

               (ii) Guarantees of the Senior Unsecured Term Loans;

               (iii) unsecured Indebtedness of Holdings that ("Permitted Holdco
          Debt") (A) is not subject to any Guarantee by the Borrower or any of
          its Subsidiaries, (B) will not mature prior to the date that is
          ninety-one (91) after the Maturity Date of the Term Facility, (C) has
          no scheduled amortization or payments of principal, (D) does not
          permit any payments in cash of interest or other amounts in respect of
          the principal thereof for at least five (5) years from the date of the
          issuance or incurrence thereof, and (E) has mandatory prepayment,
          repurchase or redemption, covenant, default and remedy provisions
          customary for senior discount notes of an issuer that is the parent of
          a borrower under senior secured credit facilities, and in any event,
          with respect to covenant, default and remedy provisions, no more
          restrictive than those contained in the Senior Subordinated Notes
          Indenture, taken as a whole (other than provisions customary for
          senior discount notes of a holding company); provided, any such
          Indebtedness shall constitute Permitted Holdco Debt only if (i) both
          before and after giving effect to the issuance or incurrence thereof,
          no Default or Event of Default shall have occurred and be continuing,
          (ii) after giving Pro Forma Effect to the issuance or incurrence
          thereof, the Holdings Consolidated Leverage Ratio shall be less than
          6.00: 1.00 and the Leverage Ratio shall be less than 4.25: 1.00, (iii)
          if the amount of such Indebtedness issued or incurred in any fiscal
          quarter exceeds $5,000,000, the Chief Financial Officer of Holdings or
          the Borrower shall have delivered an officer's certificate
          demonstrating Pro Forma Compliance with the covenants set forth in
          Section 7.11 in form and substance reasonably satisfactory to the
          Administrative Agent, it being understood that any capitalized or
          paid-in-kind interest or accreted principal on such Indebtedness shall
          not constitute an issuance or incurrence of Indebtedness for purposes
          of this proviso;

               (iv) unsecured Guarantees of obligations of its Subsidiaries in
          the ordinary course of business;

               (v) Indebtedness permitted pursuant to clause (b)(iv) above;

               (vi) Indebtedness owed to the seller of any property acquired in
          a Permitted Acquisition on an unsecured subordinated basis so long as,
          if applicable, Holdings complies with the proviso in Section
          7.06(f)(v) (whether or not any Restricted Payment is made to
          Holdings); and

               (vii) Indebtedness of the type described in Sections
          7.03(b)(viii), (xi) and (xii).

          7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with
or into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or

                                       97



substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

          (a) any Subsidiary may merge with (i) the Borrower (including a
     merger, the purpose of which is to reorganize the Borrower into a new
     jurisdiction), provided, that the Borrower shall be the continuing or
     surviving Person or the surviving Person shall expressly assume the
     obligations of the Borrower pursuant to documents reasonably acceptable to
     the Administrative Agent, or (ii) any one or more other Subsidiaries,
     provided, that when any Guarantor is merging with another Subsidiary, (A)
     the Guarantor shall be the continuing or surviving Person or (B) to the
     extent constituting an Investment, such Investment must be a permitted
     Investment in or Indebtedness of a Subsidiary which is not a Loan Party in
     accordance with Sections 7.02 and 7.03;

          (b) any Subsidiary may Dispose of all or substantially all of its
     assets (upon voluntary liquidation or otherwise) to the Borrower or to
     another Subsidiary; provided, that if the transferor in such a transaction
     is a Guarantor, then (i) the transferee must either be the Borrower or a
     Guarantor or (ii) to the extent constituting an Investment, such Investment
     must be a permitted Investment in or Indebtedness of a Subsidiary which is
     not a Loan Party in accordance with Sections 7.02 and 7.03, respectively;

          (c) any Subsidiary may merge with any other Person in order to effect
     an Investment permitted pursuant to Section 7.02; provided, that (i) the
     continuing or surviving Person shall be a Subsidiary, which together with
     each of its Subsidiaries, shall have complied with the requirements of
     Section 6.12 or (ii) to the extent constituting an Investment, such
     Investment must be a permitted Investment in accordance with Section 7.02;

          (d) the Borrower and its Subsidiaries may consummate the Acquisition
     and the Mergers; and

          (e) a merger, dissolution, liquidation, consolidation or Disposition,
     the purpose of which is to effect a Disposition permitted pursuant to
     Section 7.05.

          7.05 Dispositions. Make any Disposition or enter into any agreement to
make any Disposition, except:

          (a) Dispositions of obsolete or worn out property, whether now owned
     or hereafter acquired, in the ordinary course of business and Dispositions
     of property no longer used in the conduct of the business of the Borrower
     and its Subsidiaries;

          (b) Dispositions of inventory in the ordinary course of business;

          (c) Dispositions of property to the extent that (i) such property is
     exchanged for credit against the purchase price of similar replacement
     property or (ii) the proceeds of such Disposition are promptly applied to
     the purchase price of such replacement property;

                                       98



          (d) Dispositions of property by any Subsidiary to the Borrower or to a
     Subsidiary; provided, that if the transferor of such property is a
     Guarantor (i) the transferee thereof must either be the Borrower or a
     Guarantor or (ii) to the extent such transaction constitutes an Investment,
     such transaction is permitted under Section 7.02;

          (e) Dispositions permitted by Sections 7.04 and 7.06 (solely with
     respect to reissuances of Equity Interests of treasury stock of Holdings);

          (f) Dispositions by the Borrower and its Subsidiaries of property
     pursuant to sale-leaseback transactions; provided, that (i) the fair market
     value of all property so Disposed of shall not exceed $25,000,000 from and
     after the Closing Date and (ii) the purchase price for such property shall
     be paid to the Borrower or such Subsidiary for not less than 75% cash
     consideration;

          (g) Dispositions of Cash Equivalents;

          (h) Dispositions of accounts receivable in connection with the
     collection or compromise thereof;

          (i) licensing or sublicensing of IP Rights in the ordinary course of
     business on customary terms;

          (j) intercompany sales of property in the ordinary course of business;

          (k) leases, subleases, licenses or sublicenses of property in the
     ordinary course of business and which do not materially interfere with the
     business of Holdings and its Subsidiaries;

          (l) transfers of property subject to Casualty Events upon receipt of
     the Net Cash Proceeds of such Casualty Event; and

          (m) Dispositions by the Borrower and its Subsidiaries not otherwise
     permitted under this Section 7.05; provided, that (i) at the time of such
     Disposition, no Event of Default shall exist or would result from such
     Disposition, (ii) the aggregate book value of all property Disposed of in
     reliance on this clause (m) shall not exceed $50,000,000 and (iii) the
     purchase price for such property shall be paid to the Borrower or such
     Subsidiary for not less than 75% cash consideration;

provided, however, that (x) any Disposition of any property pursuant to this
Section 7.05 (except pursuant to Sections 7.05(d), (e), (h) and (j)), shall be
for no less than the fair market value of such property at the time of such
Disposition and (y) if the net book value of any property subject to any
Disposition pursuant to Section 7.05(f) or (m) exceeds $5,000,000, prior to any
Disposition of such property pursuant to Section 7.05(f) or (m), the Borrower
shall deliver to the Administrative Agent a pro forma Compliance Certificate
demonstrating that, upon giving effect on a Pro Forma Basis to such transaction,
the Loan Parties would be in compliance with the financial covenants set forth
in Section 7.11. To the extent any Collateral is Disposed of as expressly
permitted by this Section 7.05, such Collateral shall be sold free and clear of
the Liens

                                       99



created by the Loan Documents, and the Administrative Agent shall be authorized
to take any actions deemed appropriate in order to effect the foregoing.

          7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, except:

          (a) each Subsidiary may make Restricted Payments to the Borrower and
     to Subsidiaries (and, in the case of a Restricted Payment by a
     non-wholly-owned Subsidiary, to the Borrower and any Subsidiary and to each
     other owner of Equity Interests of such Subsidiary based on their relative
     ownership interests);

          (b) Holdings and each Subsidiary may declare and make dividend
     payments or other distributions payable solely in the Equity Interests
     (other than Disqualified Equity Interests) of such Person;

          (c) so long as no Default shall have occurred and be continuing or
     would result therefrom, Holdings (and, from and after a Qualifying IPO of
     the Borrower, the Borrower) may make Restricted Payments with the proceeds
     received from any Permitted Equity Issuance or Permitted Subordinated Debt
     to the extent not required to prepay the Loans pursuant to Section 2.05(b);

          (d) the Borrower may make Restricted Payments made on the Closing Date
     to consummate the Acquisition, the Mergers and the other Transactions;

          (e) to the extent constituting Restricted Payments, the Borrower and
     its Subsidiaries may enter into transactions expressly permitted by Section
     7.04 or 7.08;

          (f) any Subsidiary of Holdings may make Restricted Payments to
     Holdings:

               (i) the proceeds of which will be used to pay the tax liability
          for the relevant jurisdiction in respect of consolidated, combined,
          unitary or affiliated returns for the relevant jurisdiction of
          Holdings attributable to the Borrower and its Subsidiaries determined
          as if the Borrower and its Subsidiaries filed separate separately;

               (ii) the proceeds of which shall be used by Holdings to pay its
          (or to make a Restricted Payment to Investors LLC to enable it to pay)
          operating expenses incurred in the ordinary course of business and
          other corporate overhead costs and expenses (including, without
          limitation, administrative, legal, accounting and similar expenses
          provided by third parties), which are reasonable and customary and
          incurred in the ordinary course of business, in an aggregate amount
          not to exceed $500,000 in any fiscal year plus any reasonable and
          customary indemnification claims made by directors or officers of
          Holdings attributable to the ownership or operations of the Borrower
          and its Subsidiaries;

               (iii) the proceeds of which shall be used by Holdings to pay its
          (or to make a Restricted Payment to Investors LLC to enable it to pay)
          franchise taxes;

                                      100



               (iv) the proceeds of which will be used to repurchase the Equity
          Interests of Holdings (or to make a Restricted Payment to Investors
          LLC to enable it to repurchase it's Equity Interest) from directors,
          employees or members of management of Holdings or any Subsidiary (or
          their estate, family members, spouse and/or former spouse), in an
          aggregate amount not in excess of $3,000,000 in any calendar year plus
          the proceeds of any key-man life insurance maintained by Holdings or
          any of its Subsidiaries; provided, that the Borrower may carry-over
          and make in any subsequent calendar year or years, in addition to the
          amount for such calendar year, the amount not utilized in the prior
          calendar year or years up to a maximum of $12,000,000;

               (v) to finance any Investment permitted to be made pursuant to
          Section 7.02; provided, that (A) such Restricted Payment shall be made
          concurrently with the closing of such Investment and (B) Holdings
          shall, immediately following the closing thereof, cause (1) all
          property acquired (whether assets or Equity Interests) to be
          contributed to the Borrower or its Subsidiaries or (2) the merger (to
          the extent permitted in Section 7.04) of the Person formed or acquired
          into the Borrower or its Subsidiaries in order to consummate such
          Permitted Acquisition;

               (vi) repurchases of Equity Interests of Holdings deemed to occur
          upon the non-cash exercise of stock options and warrants; and

          (g) in addition to the foregoing Restricted Payments, the Borrower may
     make additional Restricted Payments to Holdings the proceeds of which may
     be utilized by Holdings to make additional Restricted Payments, in an
     aggregate amount not to exceed (A) $1,000,000 (such amount to be increased
     to (x) $20,000,000 if the Leverage Ratio is less than 4.00: 1.00 and (y)
     $30,000,000 if the Leverage Ratio is less than 3.50: 1.00) plus (B) without
     duplication, 50% of Consolidated Net Income for the period (taken as one
     accounting period) commencing with the fiscal quarter ending March 31, 2004
     and ending on the date of Holding's most recently ended fiscal quarter for
     which financial statements required to be delivered pursuant to Section
     6.01(a) or (b) are available at the time of such Restricted Payment (or, if
     Consolidated Net Income for such period is negative, less 100% of such
     deficit) minus (C) the sum of all Restricted Payments made pursuant to the
     foregoing clause (B); provided, that if at any time, the amount of
     Restricted Payments described in clause (C) exceeds such percentage of
     Consolidated Net Income under clause (B), an amount equal to such excess
     shall reduce the amount, if any, then available under clause (A), but not
     less than an amount equal to $1,000,000; and

          (h) from and after a Qualifying IPO of the Borrower, the Borrower may
     make the Restricted Payments referred to in clauses (f)(iv), (f)(vi) or
     (g).

          7.07 Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by the
Borrower and its Subsidiaries on the date hereof or any business reasonably
related or ancillary thereto.

                                      101



          7.08 Transactions with Affiliates. Enter into any transaction of any
kind with any Affiliate of the Borrower, whether or not in the ordinary course
of business, other than (a) transactions among Loan Parties, (b) on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary
as would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm's length transaction with a Person other than an Affiliate, (c)
the payment of fees and expenses in connection with the consummation of the
Transactions, (d) so long as no Event of Default shall have occurred and be
continuing under Section 8.01(f), the payment of fees to the Sponsor pursuant to
the Sponsor Management Agreement, (e) equity issuances by Holdings permitted
under Section 7.06, (f) loans and other transactions by Holdings and its
Subsidiaries to the extent permitted under this Article VII, (g) customary fees
may be paid to any directors of Holdings and reimbursement of reasonable
out-of-pocket costs of the directors of Holdings, (h) Holdings and its
Subsidiaries may enter into employment and severance arrangements with officers
and employees in the ordinary course of business and (i) Holdings and its
Subsidiaries may make payments pursuant to the tax sharing agreements among
Holdings and its Subsidiaries.

          7.09 Burdensome Agreements. Enter into or permit to exist any
Contractual Obligation (other than this Agreement or any other Loan Document)
that limits the ability (a) of any Subsidiary of the Borrower to make Restricted
Payments to the Borrower or any Guarantor which is a Subsidiary of the Borrower
or to otherwise transfer property to or invest in the Borrower or any Guarantor,
except for any agreement in effect (i) on the date hereof, (ii) at the time any
Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was
not entered into solely in contemplation of such Person becoming a Subsidiary of
the Borrower, (iii) representing Indebtedness of a Subsidiary of the Borrower
which is not a Loan Party which is permitted by Section 7.03, or (iv) in
connection with any Disposition permitted by Section 7.05, and (b) of the
Borrower or any Loan Party to create, incur, assume or suffer to exist Liens on
property of such Person for the benefit of the Lenders with respect to the
Facilities and the Obligations or under the Loan Documents except for (i)
negative pledges and restrictions on Liens in favor of any holder of
Indebtedness permitted under Section 7.03 but solely to the extent any negative
pledge relates to the property financed by or the subject of such Indebtedness
or (ii) customary restrictions on leases, subleases, licenses or asset sale
agreements otherwise permitted hereby so long as such restrictions may relate to
the assets subject thereto.

          7.10 Use of Proceeds. Use the proceeds of any Credit Extension,
whether directly or indirectly, to purchase or carry margin stock (within the
meaning of Regulation U of the FRB) or to extend credit to others for the
purpose of purchasing or carrying margin stock or to refund Indebtedness
originally incurred for such purpose.

          7.11 Financial Covenants. (a) Leverage Ratio. Permit the Leverage
Ratio as of the end of any fiscal quarter of the Borrower set forth below to be
greater than the ratio set forth below opposite such period:

- ------------------------------------------------------------------
Fiscal Year    March 31      June 30    September 30   December 31
- ------------------------------------------------------------------
    2004      5.95: 1.00   5.95: 1.00    5.95: 1.00     5.95: 1.00
- ------------------------------------------------------------------
    2005      5.75: 1.00   5.75: 1.00    5.50: 1.00     5.50: 1.00
- ------------------------------------------------------------------

                                      102



- ------------------------------------------------------------------
    2006      5.25: 1.00   5.25: 1.00    5.00: 1.00     5.00: 1.00
- ------------------------------------------------------------------
    2007      5.00: 1.00   5.00: 1.00    4.50: 1.00     4.50: 1.00
- ------------------------------------------------------------------
    2008      4.50: 1.00   4.50: 1.00    4.25: 1.00     4.25: 1.00
- ------------------------------------------------------------------
    2009      4.25: 1.00   4.25: 1.00    4.00: 1.00     4.00: 1.00
- ------------------------------------------------------------------
    2010      4.00: 1.00   4.00: 1.00    4.00: 1.00     4.00: 1.00
- ------------------------------------------------------------------

          (b) Interest Coverage Ratio. Permit the Interest Coverage Ratio as of
the end of any fiscal quarter of the Borrower as set forth below to be less than
the ratio set forth below opposite such fiscal quarter:

- ------------------------------------------------------------------
Fiscal Year    March 31      June 30    September 30   December 31
- ------------------------------------------------------------------
   2004       2.10: 1.00   2.10: 1.00    2.10: 1.00     2.10: 1.00
- ------------------------------------------------------------------
   2005       2.15: 1.00   2.15: 1.00    2.25: 1.00     2.25: 1.00
- ------------------------------------------------------------------
   2006       2.25: 1.00   2.25: 1.00    2.25: 1.00     2.50: 1.00
- ------------------------------------------------------------------
   2007       2.50: 1.00   2.50: 1.00    2.50: 1.00     2.75: 1.00
- ------------------------------------------------------------------
   2008       2.75: 1.00   2.75: 1.00    2.75: 1.00     2.75: 1.00
- ------------------------------------------------------------------
   2009       3.00: 1.00   3.00: 1.00    3.00: 1.00     3.00: 1.00
- ------------------------------------------------------------------
   2010       3.00: 1.00   3.00: 1.00    3.00: 1.00     3.00: 1.00
- ------------------------------------------------------------------

          7.12 Amendments of Organization Documents. Amend any of its
Organization Documents in a manner materially adverse to the Administrative
Agent or the Lenders.

          7.13 Accounting Changes. Make any change in fiscal year.

          7.14 Prepayments, Etc. of Indebtedness. (a) Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner any of the Senior Unsecured Term Loans, the Senior Subordinated Notes,
any Permitted Subordinated Indebtedness and any Permitted Holdco Debt
(collectively, "Junior Financing") or make any payment in violation of any
subordination terms of any Junior Financing Documentation, except (i) the
prepayment of the Senior Unsecured Term Loans (other than any Permitted
Refinancing thereof), to the extent paid out of Excess Cash Flow after
prepayment required under Section 2.05(b)(i), (ii) the refinancing thereof with
the Net Cash Proceeds of any further incurrence of Permitted Subordinated
Indebtedness, Permitted Holdco Debt or Permitted Equity Issuance, in each case,
to the extent not required to prepay any Loans or Facility pursuant to Section
2.05(b) and (iii) the conversion of any Junior Financing to Equity Interests
(other than Disqualified Equity Interests), or (b) amend, modify or change in
any manner materially adverse to the interests of the Administrative Agent or
the Lenders any term or condition of any Junior Financing Documentation.

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          7.15 Amendment of Merger Agreement. Amend, modify or supplement the
Merger Agreement or waive or otherwise consent to any change or departure from
any of the terms or conditions of the Merger Agreement in any manner materially
adverse to the Administrative Agent or the Lenders.

          7.16 Equity Interests of the Borrower and Subsidiaries. (a) (i) Permit
the Borrower or any of its Subsidiaries to own directly or indirectly less than
90% of the Equity Interests of any of the Domestic Subsidiaries except as a
result of or in connection with a dissolution, merger, consolidation or
Disposition of a Subsidiary permitted by Section 7.04, 7.05 or an Investment in
any Person permitted under Section 7.02;

          (ii) Permit the Borrower or any of its Subsidiaries to own directly or
indirectly less than 90% of the Equity Interests of any of the Foreign
Subsidiaries except (A) to qualify directors where required by applicable Law or
to satisfy other requirements of applicable Law with respect to the ownership of
Equity Interests of Foreign Subsidiaries, (B) in the case of Trilogy Egg
Products Inc., a Canadian corporation, or (C) as a result of or in connection
with a dissolution, merger, consolidation or disposition of a Subsidiary
permitted by Section 7.04, 7.05 or an Investment in any Person permitted under
Section 7.02, or

          (b) Create, incur, assume or suffer to exist any Lien on any Equity
Interests of the Borrower (other than non-consensual Liens arising solely by
operation of law).

          7.17 Holding Company. (a) In the case of Holdings, (i) conduct,
transact or otherwise engage in any business or operations other than those
incidental to its ownership of the Equity Interests of the Borrower, the
performance of the Loan Documents and any transactions that Holdings is
permitted to enter into or consummate under this Article VII or (ii) incur any
Indebtedness other than Indebtedness permitted pursuant to Section 7.03(c); or

          (b) Other than in connection with a Qualifying IPO, permit the
Borrower to be a Subsidiary that is not wholly owned by Holdings.

          7.18 Designated Senior Debt. Designate any other Indebtedness of the
Borrower or any of its Subsidiaries as "Designated Senior Debt" (or any
comparable term) under, and as defined in, the Senior Subordinated Notes
Indenture or any other applicable Junior Financing Documentation.

                                  Article VIII
                         EVENTS OF DEFAULT AND REMEDIES

          8.01 Events of Default. Any of the following shall constitute an Event
of Default:

          (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
     when and as required to be paid herein, any amount of principal of any
     Loan, or (ii) within five (5) Business Days after the same becomes due, any
     interest on any Loan or any other amount payable hereunder or with respect
     to any other Loan Document; or

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          (b) Specific Covenants. The Borrower fails to perform or observe any
     term, covenant or agreement contained in any of Sections 6.03(a), 6.05
     (solely with respect to Holdings and the Borrower) or 6.11 or Article VII;
     provided, that any Event of Default under Section 7.11 is subject to cure
     as contemplated by the last proviso set forth in the definition of
     "Consolidated EBITDA"; or

          (c) Other Defaults. Any Loan Party fails to perform or observe any
     other covenant or agreement (not specified in Section 8.01(a) or (b) above)
     contained in any Loan Document on its part to be performed or observed and
     such failure continues for thirty (30) days after notice thereof by the
     Administrative Agent to the Borrower; or

          (d) Representations and Warranties. Any representation, warranty,
     certification or statement of fact made or deemed made by or on behalf of
     the Borrower or any other Loan Party herein, in any other Loan Document, or
     in any document required to be delivered in connection herewith or
     therewith shall be incorrect or misleading in any material respect when
     made or deemed made; or

          (e) Cross-Default. (i) Any Loan Party or any Subsidiary (A) fails to
     make any payment beyond the applicable grace period with respect thereto,
     if any (whether by scheduled maturity, required prepayment, acceleration,
     demand, or otherwise) in respect of any Indebtedness (other than
     Indebtedness hereunder) having an aggregate principal amount of more than
     the Threshold Amount, or (B) fails to observe or perform any other
     agreement or condition relating to any such Indebtedness, or any other
     event occurs, the effect of which default or other event is to cause, or to
     permit the holder or holders of such Indebtedness (or a trustee or agent on
     behalf of such holder or holders or beneficiary or beneficiaries) to cause,
     with the giving of notice if required, such Indebtedness to become due or
     to be repurchased, prepaid, defeased or redeemed (automatically or
     otherwise), or an offer to repurchase, prepay, defease or redeem such
     Indebtedness to be made, prior to its stated maturity; or

          (f) Insolvency Proceedings, Etc. Any Loan Party or any of its
     Subsidiaries institutes or consents to the institution of any proceeding
     under any Debtor Relief Law, or makes an assignment for the benefit of
     creditors; or applies for or consents to the appointment of any receiver,
     trustee, custodian, conservator, liquidator, rehabilitator or similar
     officer for it or for all or any material part of its property; or any
     receiver, trustee, custodian, conservator, liquidator, rehabilitator or
     similar officer is appointed without the application or consent of such
     Person and the appointment continues undischarged or unstayed for sixty
     (60) calendar days; or any proceeding under any Debtor Relief Law relating
     to any such Person or to all or any material part of its property is
     instituted without the consent of such Person and continues undismissed or
     unstayed for sixty (60) calendar days, or an order for relief is entered in
     any such proceeding; or

          (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any
     Subsidiary becomes unable or admits in writing its inability or fails
     generally to pay its debts as they become due, or (ii) any writ or warrant
     of attachment or execution or similar process is issued or levied against
     all or any material part of the property of any such Person and is not
     released, vacated or fully bonded within sixty (60) days after its issue or
     levy; or

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          (h) Judgments. There is entered against any Loan Party or any
     Subsidiary a final judgment or order for the payment of money in an
     aggregate amount exceeding the Threshold Amount (to the extent not covered
     by independent third-party insurance as to which the insurer has been
     notified of such judgment or order and does not deny coverage) and there is
     a period of sixty (60) consecutive days during which a stay of enforcement
     of such judgment, by reason of a pending appeal or otherwise, is not in
     effect; or

          (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
     Multiemployer Plan which has resulted or could reasonably be expected to
     result in liability of any Loan Party under Title IV of ERISA to the
     Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount which
     could reasonably be expected to result in a Material Adverse Effect, or
     (ii) any Loan Party or any ERISA Affiliate fails to pay when due, after the
     expiration of any applicable grace period, any installment payment with
     respect to its withdrawal liability under Section 4201 of ERISA under a
     Multiemployer Plan in an aggregate amount which could reasonably be
     expected to result in a Material Adverse Effect; or

          (j) Invalidity of Loan Documents. Any provision of any Loan Document,
     at any time after its execution and delivery and for any reason other than
     as expressly permitted hereunder or thereunder (including as a result of a
     transaction permitted under Section 7.04 or 7.05) or satisfaction in full
     of all the Obligations, ceases to be in full force and effect; or any Loan
     Party contests in writing the validity or enforceability of any provision
     of any Loan Document; or any Loan Party denies that it has any or further
     liability or obligation under any Loan Document (other than as a result of
     repayment in full of the Obligations and termination of the Aggregate
     Commitments), or purports to revoke or rescind any Loan Document; or

          (k) Change of Control. There occurs any Change of Control; or

          (l) Collateral Document. Any Collateral Document after delivery
     thereof pursuant to Section 4.01 or 6.12 shall for any reason (other than
     pursuant to the terms thereof including as a result of a transaction
     permitted under Section 7.04 or 7.05) cease to create a valid and perfected
     first priority lien on and security interest in the Collateral covered
     thereby, subject to Liens permitted under Section 7.01; or

          (m) Junior Financing Documentation. (i) Any of the Obligations of the
     Loan Parties under the Loan Documents for any reason shall cease to be
     "Designated Senior Debt" (or any comparable term) or "Senior Debt" (or any
     comparable term) under, and as defined in, the Senior Subordinated Notes
     Indenture and any other applicable Junior Financing Documentation or (ii)
     the subordination provisions set forth in the Senior Subordinated Notes
     Indenture (or comparable provisions in any other Junior Financing
     Documentation) shall, in whole or in part, cease to be effective or cease
     to be legally valid, binding and enforceable against the holders of the
     Senior Subordinated Notes or any other Junior Financing, if applicable.

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          8.02 Remedies Upon Event of Default. If any Event of Default occurs
and is continuing, the Administrative Agent shall, at the request of, or may,
with the consent of, the Required Lenders, take any or all of the following
actions:

          (a) declare the commitment of each Lender to make Loans and any
     obligation of the L/C Issuer to make L/C Credit Extensions to be
     terminated, whereupon such commitments and obligation shall be terminated;

          (b) declare the unpaid principal amount of all outstanding Loans, all
     interest accrued and unpaid thereon, and all other amounts owing or payable
     hereunder or under any other Loan Document to be immediately due and
     payable, without presentment, demand, protest or other notice of any kind,
     all of which are hereby expressly waived by the Borrower;

          (c) require that the Borrower Cash Collateralize the L/C Obligations
     (in an amount equal to the then Outstanding Amount thereof); and

          (d) exercise on behalf of itself and the Lenders all rights and
     remedies available to it and the Lenders under the Loan Documents or
     applicable Law;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

          8.03 Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become immediately due
and payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

          First, to payment of that portion of the Obligations constituting
     fees, indemnities, expenses and other amounts (including Attorney Costs
     payable under Section 10.04 and amounts payable under Article III) payable
     to the Administrative Agent in its capacity as such;

          Second, to payment of that portion of the Obligations constituting
     fees, indemnities and other amounts (other than principal and interest)
     payable to the Lenders (including Attorney Costs payable under Section
     10.05 and amounts payable under Article III), ratably among them in
     proportion to the amounts described in this clause Second payable to them;

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          Third, to payment of that portion of the Obligations constituting
     accrued and unpaid interest on the Loans and L/C Borrowings, ratably among
     the Lenders in proportion to the respective amounts described in this
     clause Third payable to them;

          Fourth, to payment of that portion of the Obligations constituting
     unpaid principal of the Loans and L/C Borrowings and the termination value
     under Secured Hedge Obligations, ratably among the Lenders in proportion to
     the respective amounts described in this clause Fourth held by them;

          Fifth, to the Administrative Agent for the account of the L/C Issuer,
     to Cash Collateralize that portion of L/C Obligations comprised of the
     aggregate undrawn amount of Letters of Credit;

          Sixth, to the payment of all other Obligations of the Loan Parties
     owing under or in respect of the Loan Documents that are due and payable to
     the Administrative Agent and the other Secured Parties on such date,
     ratably based upon the respective aggregate amounts of all such Obligations
     owing to the Administrative Agent and the other Secured Parties on such
     date; and

          Last, the balance, if any, after all of the Obligations have been
     indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

                                   ARTICLE IX
                      ADMINISTRATIVE AGENT AND OTHER AGENTS

          9.01 Appointment and Authorization of Agents. (a) Each Lender hereby
irrevocably appoints, designates and authorizes the Administrative Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, nor shall any Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" herein and in the other Loan
Documents with reference to any Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

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          (b) The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith, and
the L/C Issuer shall have all of the benefits and immunities (i) provided to the
Agents in this Article IX with respect to any acts taken or omissions suffered
by the L/C Issuer in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent" as used in
this Article IX and in the definition of "Agent-Related Person" included the L/C
Issuer with respect to such acts or omissions, and (ii) as additionally provided
herein with respect to the L/C Issuer.

          (c) The Administrative Agent shall also act as the "collateral agent"
under the Loan Documents, and each of the Lenders (in its capacities as a
Lender, Swing Line Lender (if applicable), L/C Issuer (if applicable) and a
potential Hedge Bank) hereby irrevocably appoints and authorizes the
Administrative Agent to act as the agent of such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with such
powers and discretion as are reasonably incidental thereto. In this connection,
the Administrative Agent, as "collateral agent" (and any co-agents, sub-agents
and attorneys-in-fact appointed by the Administrative Agent pursuant to Section
9.02 for purposes of holding or enforcing any Lien on the Collateral (or any
portion thereof) granted under the Collateral Documents, or for exercising any
rights and remedies thereunder at the direction of the Administrative Agent),
shall be entitled to the benefits of all provisions of this Article IX
(including, without limitation, Section 9.07, as though such co-agents,
sub-agents and attorneys-in-fact were the "collateral agent" under the Loan
Documents) as if set forth in full herein with respect thereto.

          9.02 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document (including for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents or of exercising any rights and
remedies thereunder) by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel and other consultants or experts
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.

          9.03 Liability of Agents. No Agent-Related Person shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be responsible
in any manner to any Lender or participant for any recital, statement,
representation or warranty made by any Loan Party or any officer thereof,
contained herein or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or the perfection or
priority of any Lien or security interest created or purported to be created
under the Collateral Documents, or for any failure of any Loan Party or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
or participant to ascertain or to inquire as to the observance or

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performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party or any Affiliate thereof.

          9.04 Reliance by Agents. (a) Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Loan
Party), independent accountants and other experts selected by such Agent. Each
Agent shall be fully justified in failing or refusing to take any action under
any Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders (or such greater number of Lenders as may be expressly required hereby
in any instance) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

          (b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

          9.05 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default and stating that
such notice is a "notice of default." The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to any Event of Default as may be directed by the
Required Lenders in accordance with Article VIII; provided, however, that unless
and until the Administrative Agent has received any such direction, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable or in the best interest of the Lenders.

          9.06 Credit Decision; Disclosure of Information by Agents. Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by any Agent hereafter taken, including any
consent to and acceptance of any assignment or review of the affairs of any Loan
Party or any Affiliate thereof, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender as to any matter,
including whether Agent-Related Persons have disclosed material information in
their

                                      110



possession. Each Lender represents to each Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their respective
Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower and the other Loan Parties
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
the other Loan Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by any Agent herein, such
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the Loan
Parties or any of their respective Affiliates which may come into the possession
of any Agent-Related Person.

          9.07 Indemnification of Agents. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any
Loan Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person's own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section 9.07; provided, further, that to the extent the L/C
Issuer is entitled to indemnification under this Section 9.07 solely in its
capacity and role as L/C Issuer, only the Revolving Credit Lenders shall be
required to indemnify the L/C Issuer in accordance with this Section 9.07. In
the case of any investigation, litigation or proceeding giving rise to any
Indemnified Liabilities, this Section 9.07 applies whether any such
investigation, litigation or proceeding is brought by any Lender or any other
Person. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section 9.07 shall survive termination of the Aggregate
Commitments, the payment of all other Obligations and the resignation of the
Administrative Agent.

          9.08 Agents in their Individual Capacities. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire Equity

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Interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with each of the Loan Parties and their
respective Affiliates as though Bank of America were not the Administrative
Agent or the L/C Issuer hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Loan Party or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Party or such Affiliate) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America shall have the
same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not the Administrative Agent or the L/C
Issuer, and the terms "Lender" and "Lenders" include Bank of America in its
individual capacity.

          9.09 Successor Agents. The Administrative Agent may resign as the
Administrative Agent upon thirty (30) days' notice to the Lenders. If the
Administrative Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be consented to by the Borrower at all times other than
during the existence of an Event of Default under Section 8.01(f) (which consent
of the Borrower shall not be unreasonably withheld or delayed). If no successor
agent is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, the Person
acting as such successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent,"
shall mean such successor administrative agent and/or supplemental
administrative agent, as the case may be, and the retiring Administrative
Agent's appointment, powers and duties as the Administrative Agent shall be
terminated. After the retiring Administrative Agent's resignation hereunder as
the Administrative Agent, the provisions of this Article IX and Sections 10.04
and 10.05 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Administrative Agent under this Agreement. If no
successor agent has accepted appointment as the Administrative Agent by the date
which is thirty (30) days following the retiring Administrative Agent's notice
of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above. Upon the
acceptance of any appointment as the Administrative Agent hereunder by a
successor and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such amendments or supplements to the
Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, the Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, discretion, privileges, and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents. After the retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent.

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          9.10 Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:

          (a) to file and prove a claim for the whole amount of the principal
     and interest owing and unpaid in respect of the Loans, L/C Obligations and
     all other Obligations that are owing and unpaid and to file such other
     documents as may be necessary or advisable in order to have the claims of
     the Lenders and the Administrative Agent (including any claim for the
     reasonable compensation, expenses, disbursements and advances of the
     Lenders and the Administrative Agent and their respective agents and
     counsel and all other amounts due the Lenders and the Administrative Agent
     under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial
     proceeding; and

          (b) to collect and receive any monies or other property payable or
     deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the Agents
and their respective agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

          Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

          9.11 Collateral and Guaranty Matters. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion,

          (a) to release any Lien on any property granted to or held by the
     Administrative Agent under any Loan Document (i) upon termination of the
     Aggregate Commitments and payment in full of all Obligations (other than
     contingent indemnification obligations not yet accrued and payable) and the
     expiration or termination of all Letters of Credit, (ii) that is sold or to
     be sold as part of or in connection with any sale permitted hereunder or
     under any other Loan Document, or (iii) subject to Section 10.01, if
     approved, authorized or ratified in writing by the Required Lenders;

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          (b) to subordinate any Lien on any property granted to or held by the
     Administrative Agent under any Loan Document to the holder of any Lien on
     such property that is permitted by Section 7.01(i); and

          (c) to release any Guarantor from its obligations under the Guaranty
     if such Person ceases to be a Subsidiary as a result of a transaction
     permitted hereunder.

          Upon request by the Administrative Agent at any time, the Required
Lenders will confirm in writing the Administrative Agent's authority to release
its interest in particular types or items of property, or to release any
Guarantor from its obligations under the Guaranty pursuant to this Section 9.11.
In each case as specified in this Section 9.11, the Administrative Agent will,
at the Borrower's expense, execute and deliver to the applicable Loan Party such
documents as such Loan Party may reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted under
the Collateral Documents, or to release such Guarantor from its obligations
under the Guaranty, in each case in accordance with the terms of the Loan
Documents and this Section 9.11.

          9.12 Other Agents; Arrangers and Managers. None of the Lenders or
other Persons identified on the facing page or signature pages of this Agreement
as a "co-syndication agent," "co-documentation agent", "co-agent," "book
manager," "lead manager," "arranger," "lead arranger" or "co-arranger" shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without limiting
the foregoing, none of the Lenders or other Persons so identified shall have or
be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders or
other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

          9.13 Appointment of Supplemental Administrative Agents. (a) It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any Law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case the Administrative Agent
deems that by reason of any present or future Law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, the Administrative Agent is hereby authorized
to appoint an additional individual or institution selected by the
Administrative Agent in its sole discretion as a separate trustee, co-trustee,
administrative agent, collateral agent, administrative sub-agent or
administrative co-agent (any such additional individual or institution being
referred to herein individually as a "Supplemental Administrative Agent" and
collectively as "Supplemental Administrative Agents").

          (b) In the event that the Administrative Agent appoints a Supplemental
Administrative Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to the
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Administrative Agent to the extent, and

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only to the extent, necessary to enable such Supplemental Administrative Agent
to exercise such rights, powers and privileges with respect to such Collateral
and to perform such duties with respect to such Collateral, and every covenant
and obligation contained in the Loan Documents and necessary to the exercise or
performance thereof by such Supplemental Administrative Agent shall run to and
be enforceable by either the Administrative Agent or such Supplemental
Administrative Agent, and (ii) the provisions of this Article IX and of Section
9.07 (obligating the Borrower to pay the Administrative Agent's expenses and to
indemnify the Administrative Agent) that refer to the Administrative Agent shall
inure to the benefit of such Supplemental Administrative Agent and all
references therein to the Administrative Agent shall be deemed to be references
to the Administrative Agent and/or such Supplemental Administrative Agent, as
the context may require.

          (c) Should any instrument in writing from the Borrower, Holdings or
any other Loan Party be required by any Supplemental Administrative Agent so
appointed by the Administrative Agent for more fully and certainly vesting in
and confirming to him or it such rights, powers, privileges and duties, the
Borrower or Holdings, as applicable, shall, or shall cause such Loan Party to,
execute, acknowledge and deliver any and all such instruments promptly upon
request by the Administrative Agent. In case any Supplemental Administrative
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Administrative Agent, to the extent permitted by Law, shall vest in and be
exercised by the Administrative Agent until the appointment of a new
Supplemental Administrative Agent.

                                   ARTICLE X
                                  MISCELLANEOUS

          10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and the Borrower or the applicable Loan Party, as
the case may be, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:

          (a) extend or increase the Commitment of any Lender without the
     written consent of each Lender directly affected thereby (it being
     understood that a waiver of any condition precedent set forth in Section
     4.02 or the waiver of any Event of Default, mandatory prepayment or
     mandatory reduction of the Commitments shall not constitute an extension or
     increase of any Commitment of any Lender);

          (b) postpone any date scheduled for any payment of principal or
     interest under Section 2.07 or 2.08 without the written consent of each
     Lender directly affected thereby, it being understood that the waiver of
     any mandatory prepayment of the Term Loans shall not constitute a
     postponement of any date scheduled for the payment of principal or
     interest;

          (c) reduce the principal of, or the rate of interest specified herein
     on, any Loan or L/C Borrowing, or (subject to clause (iii) of the second
     proviso to this Section 10.01)

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     any fees or other amounts payable hereunder or under any other Loan
     Document without the written consent of each Lender directly affected
     thereby, it being understood that any change to the definition of Leverage
     Ratio or in the component definitions thereof shall not constitute a
     reduction in the rate; provided, however, that only the consent of the
     Required Lenders shall be necessary to amend the definition of "Default
     Rate" or to waive any obligation of the Borrower to pay interest at the
     Default Rate;

          (d) change the order of application of any reduction in the
     Commitments or any prepayment of Loans between the Facilities from the
     application thereof set forth in the applicable provisions of Section
     2.05(b) or 2.06(b), respectively, in any manner that materially and
     adversely affects the Lenders under such Facilities without the written
     consent of Lenders having more than 50% of the Aggregate Credit Exposures
     then in effect within each of the following classes of Commitments, Loans
     and other Credit Extensions: (i) the class consisting of the Revolving
     Credit Commitment combined on an aggregate basis, and (ii) the class
     consisting of the Term Commitment combined on an aggregate basis;

          (e) change any provision of this Section 10.01, the definition of
     "Required Lenders" or Section 2.06(c) without the written consent of each
     Lender;

          (f) other than in a transaction permitted under Section 7.05, release
     all or substantially all of the Collateral in any transaction or series of
     related transactions, without the written consent of each Lender; or

          (g) other than in connection with a transaction permitted under
     Section 7.04 or 7.05, release all or substantially all of the value of the
     Guaranty, without the written consent of each Lender;

and provided, further that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of, or any fees or other amounts payable to, the Administrative
Agent under this Agreement or any other Loan Document; and (iv) Section 10.07(g)
may not be amended, waived or otherwise modified without the consent of each
Granting Lender all or any part of whose Loans are being funded by an SPC at the
time of such amendment, waiver or other modification; and (v) the Fee Letter may
be amended, or rights or privileges thereunder waived, in a writing executed
only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender (it being understood
that any Commitments or Loans held or deemed held by any Defaulting Lender shall
be excluded for a vote of the Lenders hereunder requiring any consent of the
Lenders).

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          10.02 Notices and Other Communications; Facsimile Copies. (a) General.
Unless otherwise expressly provided herein, all notices and other communications
provided for hereunder or any other Loan Document shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to Section
10.02(c)) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

          (i) if to the Borrower, the Administrative Agent, the L/C Issuer or
     the Swing Line Lender, to the address, facsimile number, electronic mail
     address or telephone number specified for such Person on Schedule 10.02 or
     to such other address, facsimile number, electronic mail address or
     telephone number as shall be designated by such party in a notice to the
     other parties; and

          (ii) if to any other Lender, to the address, facsimile number,
     electronic mail address or telephone number specified in its Administrative
     Questionnaire or to such other address, facsimile number, electronic mail
     address or telephone number as shall be designated by such party in a
     notice to the Borrower, the Administrative Agent, the L/C Issuer and the
     Swing Line Lender.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four (4) Business Days
after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when
sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of Section
10.02(c)), when delivered; provided, however, that notices and other
communications to the Administrative Agent, the L/C Issuer and the Swing Line
Lender pursuant to Article II shall not be effective until actually received by
such Person. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder.

          (b) Effectiveness of Facsimile Documents and Signatures. Loan
Documents may be transmitted and/or signed by facsimile. The effectiveness of
any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, the Agents and the Lenders. The Administrative Agent may also
require that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.

          (c) Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 6.02, and to
distribute Loan Documents for execution by the parties thereto, and may not be
used for any other purpose.

          (d) Reliance by Agents and Lenders. The Administrative Agent and the
Lenders shall be entitled to rely and act upon any notices (including telephonic
Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on
behalf of the Borrower even if

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(i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify each Agent-Related Person and
each Lender from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower in the absence of gross negligence or willful misconduct. All
telephonic notices to the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

          10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Law.

          10.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Administrative Agent for all reasonable costs and expenses
incurred in connection with the preparation, negotiation, syndication and
execution of this Agreement and the other Loan Documents, and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs of Shearman & Sterling LLP, and (b) to pay
or reimburse the Administrative Agent and each Lender for all reasonable costs
and expenses incurred in connection with the enforcement of any rights or
remedies under this Agreement or the other Loan Documents (including all such
costs and expenses incurred during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs of counsel
to the Administrative Agent). The foregoing costs and expenses shall include all
search, filing, recording, title insurance and appraisal charges and fees and
taxes related thereto, and other out-of-pocket expenses incurred by any Agent.
All amounts due under this Section 10.04 shall be paid within twenty (20)
Business Days after invoiced or demand therefor. The agreements in this Section
10.04 shall survive the termination of the Aggregate Commitments and repayment
of all other Obligations. If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it hereunder or under any Loan Document,
such amount may be paid on behalf of such Loan Party by the Administrative Agent
or any Lender, in its sole discretion.

          10.05 Indemnification by the Borrower. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and, in the case of any funds,
trustees and advisors and attorneys-in-fact (collectively the "Indemnitees")
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and
disbursements (including Attorney Costs (which shall be limited to one (1)
counsel to the Administrative Agent and the Lenders, unless (x) the interests of
the Administrative Agent and the Lenders are sufficiently divergent, in which
case one (1) additional counsel may be

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appointed, and (y) if the interests of any Lender or group of Lenders (other
than all of the Lenders) are distinctly or disproportionately affected, one (1)
additional counsel for such Lender or group of Lenders)) of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnitee in any way relating to or arising out of or in connection
with (a) the execution, delivery, enforcement, performance or administration of
any Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer 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), or (c) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by the Borrower, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to the Borrower, any Subsidiary
or any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"), in all cases, whether
or not caused by or arising, in whole or in part, out of the negligence of the
Indemnitee; provided, that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee or breach of the Loan Documents by such
Indemnitee. No Indemnitee shall be liable for any damages arising from the use
by others of any information or other materials obtained through IntraLinks or
other similar information transmission systems in connection with this
Agreement, nor shall any Indemnitee or any Loan Party have any liability for any
special, punitive, indirect or consequential damages relating to this Agreement
or any other Loan Document or arising out of its activities in connection
herewith or therewith (whether before or after the Closing Date). In the case of
an investigation, litigation or other proceeding to which the indemnity in this
Section 10.05 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnitee or any other Person,
whether or not any Indemnitee is otherwise a party thereto and whether or not
any of the transactions contemplated hereunder or under any of the other Loan
Documents is consummated. All amounts due under this Section 10.05 shall be
payable within twenty (20) Business Days after demand therefor. The agreements
in this Section 10.05 shall survive the resignation of the Administrative Agent,
the replacement of any Lender, the termination of the Aggregate Commitments and
the repayment, satisfaction or discharge of all the other Obligations.

          10.06 Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower is made to any Agent or any Lender, or any Agent or any
Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by such Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally

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intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
applicable share of any amount so recovered from or repaid by any Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Rate from time to time in effect.

          10.07 Successors and Assigns. (a) 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, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of Section 10.07(b), (ii) by
way of participation in accordance with the provisions of Section 10.07(d),
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of Section 10.07(f) or (iv) to an SPC in accordance with the
provisions of Section 10.07(g) (and any other attempted assignment or transfer
by any party hereto 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,
Participants to the extent provided in Section 10.07(d) and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

          (b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans (including for
purposes of this Section 10.07(b), participations in L/C Obligations and in
Swing Line Loans) at the time owing to it); provided, that (i) except in the
case of an assignment of the entire remaining amount of the assigning Lender's
Commitment and the Loans at the time owing to it or in the case of an assignment
to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the applicable Commitment is not then in
effect, the outstanding principal balance of the Loan of the assigning Lender
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of
the Trade Date, shall not be less than $5,000,000, in the case of any assignment
in respect of the Revolving Credit Facility, or $1,000,000, in the case of any
assignment in respect of the Term Facility, unless each of the Administrative
Agent and, so long as no Event of Default in respect of Section 8.01(a) or (f)
has occurred and is continuing, the Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed); (ii) 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 with respect to
the Loans or the Commitment assigned, except that this clause (ii) shall not (x)
apply to rights in respect of Swing Line Loans or (y) prohibit any Lender from
assigning all or a portion of its rights and obligations among separate
Facilities on a non-pro rata basis; (iii) any assignment of a Revolving Credit
Commitment must be approved by the Administrative Agent, the L/C Issuer and the
Swing Line Lender unless the Person that is the proposed assignee is itself a
Revolving Credit Lender (whether or not the proposed assignee would otherwise
qualify as an Eligible Assignee); (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and

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recordation fee of $3,500 (except, in the case of contemporaneous assignments by
any Lender to one or more Approved Funds, only a single processing and recording
fee shall be payable for such assignments); and (v) the assigning Lender shall
deliver any Notes evidencing such Loans to the Borrower or the Administrative
Agent. Subject to acceptance and recording thereof by the Administrative Agent
pursuant to Section 10.07(c), from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, 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 Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption 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 3.01, 3.04, 3.05, 10.04 and 10.05
with respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, and the surrender by the assigning Lender of its
Note, the Borrower (at its expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this clause (b) 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 Section 10.07(d).

          (c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts (and related interest amounts) of the Loans, L/C
Obligations (specifying the Unreimbursed Amounts), L/C Borrowings and amounts
due under Section 2.03, owing to, each Lender pursuant to the terms hereof from
time to time (the "Register"). The entries in the Register shall be conclusive,
absent manifest error, and the Borrower, the Agents and the Lenders shall 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,
any Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

          (d) Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or Highland Capital Management, L.P. or any of its
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender's
participations in L/C Obligations and/or Swing Line 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
Agents 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, waiver or other modification described in the first proviso to
Section 10.01 that

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directly affects such Participant. Subject to Section 10.07(e), the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 3.01,
3.04 and 3.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 10.07(b). To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.09 as
though it were a Lender, provided, such Participant agrees to be subject to
Section 2.13 as though it were a Lender.

          (e) A Participant shall not be entitled to receive any greater payment
under Section 3.01, 3.04 or 3.05 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 shall not be entitled to the
benefits of Section 3.01 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 10.15 as though it were a Lender.

          (f) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its Note,
if any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided, that no such pledge
or assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto and no
Lender may pledge all or part of its rights to Highland Capital Management, L.P.
or any its Affiliates or Subsidiaries.

          (g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower (an "SPC") the option to provide all or
any part of any Loan that such Granting Lender would otherwise be obligated to
make pursuant to this Agreement; provided, that (i) nothing herein shall
constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects
not to exercise such option or otherwise fails to make all or any part of such
Loan, the Granting Lender shall be obligated to make such Loan pursuant to the
terms hereof. Each party hereto hereby agrees that (i) neither the grant to any
SPC nor the exercise by any SPC of such option shall increase the costs or
expenses or otherwise increase or change the obligations of the Borrower under
this Agreement (including its obligations under Section 3.01 or 3.04), (ii) no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement for which a Lender would be liable, and (iii) the Granting Lender
shall for all purposes, including the approval of any amendment, waiver or other
modification of any provision of any Loan Document, remain the lender of record
hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment
of the Granting Lender to the same extent, and as if, such Loan were made by
such Granting Lender. Notwithstanding anything to the contrary contained herein,
any SPC may (i) with notice to, but without prior consent of the Borrower and
the Administrative Agent and with the payment of a processing fee of $3,500,
assign all or any portion of its right to receive payment with respect to any
Loan to the Granting Lender and (ii) disclose on a confidential basis any
non-public information relating to its funding of Loans to any rating agency,
commercial paper dealer or provider of any surety or Guarantee or credit or
liquidity enhancement to such SPC.

                                      122



          (h) Notwithstanding anything to the contrary contained herein, any
Lender that is a Fund may create a security interest in all or any portion of
the Loans owing to it and the Note, if any, held by it to the trustee for
holders of obligations owed, or securities issued, by such Fund as security for
such obligations or securities; provided, that unless and until such trustee
actually becomes a Lender in compliance with the other provisions of this
Section 10.07, (i) no such pledge shall release the pledging Lender from any of
its obligations under the Loan Documents, (ii) such trustee shall not be
entitled to exercise any of the rights of a Lender under the Loan Documents even
though such trustee may have acquired ownership rights with respect to the
pledged interest through foreclosure or otherwise, and (iii) no Lender may
create a security interest in favor of Highland Capital Management, L.P. or any
of its Affiliates or Subsidiaries.

          (i) Notwithstanding anything to the contrary contained herein, if at
any time Bank of America assigns all of its Commitments and Loans pursuant to
Section 10.07(b), Bank of America may, (i) upon thirty (30) days' notice to the
Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon thirty (30)
days' notice to the Borrower, resign as Swing Line Lender. In the event of any
such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be
entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line
Lender hereunder; provided, however, that no failure by the Borrower to appoint
any such successor shall affect the resignation of Bank of America as L/C Issuer
or Swing Line Lender, as the case may be. If Bank of America resigns as L/C
Issuer, it shall retain all the rights and obligations of the L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective
date of its resignation as L/C Issuer and all L/C Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).
If Bank of America resigns as Swing Line Lender, it shall retain all the rights
of the Swing Line Lender provided for hereunder with respect to Swing Line Loans
made by it and outstanding as of the effective date of such resignation,
including the right to require the Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.04(c).

          10.08 Confidentiality. Each of the Agents and the Lenders agrees to
maintain the confidentiality of the Information, except that Information may be
disclosed (a) to its 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; (e) subject to
an agreement containing provisions substantially the same as those of this
Section 10.08 (or as may otherwise be reasonably acceptable to the Borrower), to
any Eligible Assignee of or Participant in, or any prospective Eligible Assignee
of or Participant in, any of its rights or obligations under this Agreement; (f)
with the consent of the Borrower; (g) to the extent such Information becomes
publicly available other than as a result of a breach of this Section 10.08; (h)
to any state, Federal or foreign authority or examiner (including the National
Association of Insurance Commissioners or any other similar organization)
regulating any Lender; or (i) to any rating agency when required by it (it being
understood that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information relating to the
Loan Parties received by it from such Lender). In addition, the Agents and the
Lenders may disclose the existence of this Agreement and information about this

                                      123



Agreement to market data collectors, similar service providers to the lending
industry, and service providers to the Agents and the Lenders in connection with
the administration and management of this Agreement, the other Loan Documents,
the Commitments, and the Credit Extensions. For the purposes of this Section
10.08, "Information" means all information received from any Loan Party relating
to any Loan Party or its business, other than any such information that is
publicly available to any Agent or any Lender prior to disclosure by any Loan
Party other than as a result of a breach of this Section 10.08; provided, that,
in the case of information received from a Loan Party 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 10.08 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. Notwithstanding anything (express or implied) herein
or in any other Loan Document to the contrary, "Information" shall not include,
and the Administrative Agent, each Lender and each Loan Party may disclose
without limitation of any kind, any information with respect to the "tax
treatment" and "tax structure" (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and thereby
and all materials of any kind (including opinions or other tax analyses) that
are provided to the Administrative Agent or such Lender or Loan Party relating
to such tax treatment and tax structure.

          10.09 Setoff. In addition to any rights and remedies of the Lenders
provided by Law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) 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 by,
and other Indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Obligations owing
to such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not such Agent or such Lender shall have
made demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or Indebtedness. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Administrative Agent and each Lender under this
Section 10.09 are in addition to other rights and remedies (including, without
limitation, other rights of setoff) that the Administrative Agent and such
Lender may have. Notwithstanding anything herein or in any other Loan Document
to the contrary, in no event shall the assets of any Foreign Subsidiary
constitute security, or shall the proceeds of such assets be available for,
payment of the Obligations of the Borrower or any Domestic Subsidiary, it being
understood that (a) the Equity Interests of any Foreign Subsidiary does not
constitute such an asset and (b) the provisions hereof shall not limit, reduce
or otherwise diminish in any respect the Borrower's obligations to make any
mandatory prepayment pursuant to Section 2.05(b)(ii).

          10.10 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan

                                      124



Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable Law (the "Maximum Rate"). If any Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrower. In determining whether the interest
contracted for, charged, or received by an Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable Law, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

          10.11 Counterparts. This Agreement and each other Loan Document may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Delivery
by telecopier of an executed counterpart of a signature page to this Agreement
and each other Loan Document shall be effective as delivery of an original
executed counterpart of this Agreement and such other Loan Document. The Agents
may also require that any such documents and signatures delivered by telecopier
be confirmed by a manually-signed original thereof; provided, that the failure
to request or deliver the same shall not limit the effectiveness of any document
or signature delivered by telecopier.

          10.12 Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided, that the inclusion of
supplemental rights or remedies in favor of the Agents or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.

          10.13 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by each Agent
and each Lender, regardless of any investigation made by any Agent or any Lender
or on their behalf and notwithstanding that any Agent or any Lender may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.

          10.14 Severability. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby. The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                                      125



          10.15 Tax Forms. (a) (i) Each Lender and Agent that is not a "United
States person" within the meaning of Section 7701(a)(30) of the Code (each, a
"Foreign Lender") shall deliver to the Borrower and the Administrative Agent,
prior to receipt of any payment subject to withholding under the Code (or upon
accepting an assignment of an interest herein), two duly signed, properly
completed copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Lender and entitling it to an exemption from, or reduction of,
United States withholding tax on all payments to be made to such Foreign Lender
by the Borrower or any other Loan Party pursuant to this Agreement or any other
Loan Document) or IRS Form W-8ECI or any successor thereto (relating to all
payments to be made to such Foreign Lender by the Borrower or any other Loan
Party pursuant to this Agreement or any other Loan Document) or such other
evidence reasonably satisfactory to the Borrower and the Administrative Agent
that such Foreign Lender is entitled to an exemption from, or reduction of,
United States withholding tax, including any exemption pursuant to Section
881(c) of the Code, and in the case of a Foreign Lender claiming such an
exemption under Section 881(c) of the Code, a certificate that establishes in
writing to the Borrower and the Administrative Agent that such Foreign Lender is
not (i) a "bank" as defined in Section 881(c)(3)(A) of the Code, (ii) a
10-percent shareholder within the meaning of Section 871(h)(3)(B) of the Code,
and (iii) a controlled foreign corporation related to the Borrower with the
meaning of Section 864(d) of the Code. Thereafter and from time to time, each
such Foreign Lender shall (A) promptly submit to the Borrower and the
Administrative Agent such additional duly completed and signed copies of one or
more of such forms or certificates (or such successor forms or certificates as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is reasonably satisfactory to the
Borrower and the Administrative Agent of any available exemption from, or
reduction of, United States withholding taxes in respect of all payments to be
made to such Foreign Lender by the Borrower or other Loan Party pursuant to this
Agreement, or any other Loan Document, in each case, (1) on or before the date
that any such form, certificate or other evidence expires or becomes obsolete,
(2) after the occurrence of any event requiring a change in the most recent
form, certificate or evidence previously delivered by it to the Borrower and the
Administrative Agent and (3) from time to time thereafter if reasonably
requested by the Borrower or the Administrative Agent, and (B) promptly notify
the Borrower and the Administrative Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.

          (ii) Each Foreign Lender, to the extent it does not act or ceases to
act for its own account with respect to any portion of any sums paid or payable
to such Foreign Lender under any of the Loan Documents (for example, in the case
of a typical participation by such Foreign Lender), shall deliver to the
Borrower and the Administrative Agent on the date when such Foreign Lender
ceases to act for its own account with respect to any portion of any such sums
paid or payable, and at such other times as may be necessary in the
determination of the Borrower or the Administrative Agent (in either case, in
the reasonable exercise of its discretion), (A) two duly signed completed copies
of the forms or statements required to be provided by such Foreign Lender as set
forth above, to establish the portion of any such sums paid or payable with
respect to which such Foreign Lender acts for its own account that is not
subject to United States withholding tax, and (B) two duly signed completed
copies of IRS Form W-8IMY (or any successor thereto), together with any
information such Foreign Lender chooses to transmit with such form, and any
other certificate or statement of exemption required under

                                      126



the Code, to establish that such Foreign Lender is not acting for its own
account with respect to a portion of any such sums payable to such Foreign
Lender.

          (iii) The Borrower shall not be required to pay any additional amount
or any indemnity payment under Section 3.01 to (A) any Foreign Lender with
respect to any Taxes required to be deducted or withheld on the basis of the
information, certificates or statements of exemption such Lender transmits with
an IRS Form W-8IMY pursuant to this Section 10.15(a), (B) any Foreign Lender if
such Foreign Lender shall have failed to satisfy the foregoing provisions of
this Section 10.15(a), or (C) any U.S. Lender if such U.S. Lender shall have
failed to satisfy the provisions of Section 10.15(b); provided, that if such
Lender shall have satisfied the requirement of this Section 10.15(a) or Section
10.15(b), as applicable, on the date such Lender became a Lender or ceased to
act for its own account with respect to any payment under any of the Loan
Documents, nothing in this Section 10.15(a) or Section 10.15(b) shall relieve
the Borrower of its obligation to pay any amounts pursuant to Section 3.01 in
the event that, as a result of any change in any applicable Law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender or other Person for the account of which
such Lender receives any sums payable under any of the Loan Documents is not
subject to withholding or is subject to withholding at a reduced rate.

          (iv) The Administrative Agent may deduct and withhold any taxes
required by any Laws to be deducted and withheld from any payment under any of
the Loan Documents.

          (b) Each Lender and Agent that is a "United States person" within the
meaning of Section 7701(a)(30) of the Code (each, a "U.S. Lender") shall deliver
to the Administrative Agent and the Borrower two duly signed, properly completed
copies of IRS Form W-9 on or prior to the Closing Date (or on or prior to the
date it becomes a party to this Agreement), certifying that such U.S. Lender is
entitled to an exemption from United States backup withholding tax, or any
successor form. If such U.S. Lender fails to deliver such forms, then the
Administrative Agent may withhold from any payment to such U.S. Lender an amount
equivalent to the applicable backup withholding tax imposed by the Code.

          (c) If any Governmental Authority asserts that the Borrower or the
Administrative Agent did not properly withhold or backup withhold, as the case
may be, any tax or other amount from payments made to or for the account of any
Foreign Lender or U.S. Lender, such Foreign Lender or U.S. Lender shall
indemnify the Borrower and the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Borrower and the Administrative Agent under this Section 10.15,
and costs and expenses (including Attorney Costs) of the Borrower and the
Administrative Agent. The obligation of the Foreign Lenders or U.S. Lenders,
severally, under this Section 10.15 shall survive the termination of the
Aggregate Commitments, repayment of all other Obligations hereunder and the
resignation of the Administrative Agent.

          10.16 Governing Law. (a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, the LAW OF THE STATE OF
NEW YORK.

                                      127



          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, EACH
Agent AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, EACH Agent AND
EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

          10.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION 10.17 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

          10.18 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent shall have
been notified by each Lender, Swing Line Lender and the L/C Issuer that each
such Lender, Swing Line Lender and the L/C Issuer has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, each Agent and
each Lender and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lenders except as permitted by
Section 7.04.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                      128



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

                                    THL FOOD PRODUCTS CO.


                                    By: /s/ John D. Reedy
                                        ----------------------------------------
                                    Name: John D. Reedy
                                    Title: Chief Financial Officer and Treasurer


                                    THL FOOD PRODUCTS HOLDING CO.


                                    By: /s/ John D. Reedy
                                        ----------------------------------------
                                    Name: John D. Reedy
                                    Title: Chief Financial Officer and Treasurer



                                    BANK OF AMERICA, N.A., as
                                    Administrative Agent


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------


                                    BANK OF AMERICA, N.A., as a Lender, L/C
                                    Issuer and Swing Line Lender


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------



                                    DEUTSCHE BANK SECURITIES INC.,
                                    as Co-Syndication Agent


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name: Illegible
                                    Title: Director


                                    DEUTSCHE BANK SECURITIES INC.,
                                    as Co-Syndication Agent


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name: Illegible
                                    Title: Managing Director



                                    UBS SECURITIES LLC,
                                    as Co-Syndication Agent


                                    By: /s/ John C. Crockett
                                        ----------------------------------------
                                    Name: John C. Crockett
                                    Title: Director



                                    GENERAL ELECTRIC CAPITAL CORPORATION,
                                    as Co-Documentation Agent


                                    By: /s/ W. Jerome McDermott
                                        ----------------------------------------
                                    Name: W. Jerome McDermott
                                    Title: Duly Authorized Signatory



                                    COOPERATIVE CENTRALE RAIFFEISEN -
                                    BOERENLEENBANK B.A., "RABOBANK
                                    INTERNATIONAL," NEW YORK BRANCH,
                                    as Co-Documentation Agent and as Lender


                                    By: /s/ Michael Laurie
                                        ----------------------------------------
                                    Name: Michael Laurie
                                    Title: Executive Director


                                    By: /s/ Brett Delfino
                                        ----------------------------------------
                                    Name: Brett Delfino
                                    Title: Executive Director



                                    LENDER

                                    BANK OF TOKYO-MITSUBISHI TRUST COMPANY


                                    By: /s/ Chris Droussious
                                        ----------------------------------------
                                    Name: Chris Droussious
                                    Title: Vice President



                                    LENDER

                                    CAPITAL FARM CREDIT


                                    By: /s/ Robert P. Abbott
                                        ----------------------------------------
                                    Name: Robert P. Abbott
                                    Title: Vice President - Commercial Loans



                                    LENDER

                                    CREDIT INDUSTRIEL ET COMMERCIAL


                                    By: /s/ Sean Mounier
                                        ----------------------------------------
                                    Name: Sean Mounier
                                    Title: First Vice President


                                    By: /s/ Anthony Rock
                                        ----------------------------------------
                                    Name: Anthony Rock
                                    Title: Vice President



                                    LENDER

                                    DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH


                                    By: /s/ Scottye Lindsey
                                        ----------------------------------------
                                    Name: Scottye Lindsey
                                    Title: Vice President


                                    By: /s/ Mary Kay Coyle
                                        ----------------------------------------
                                    Name: Mary Kay Coyle
                                    Title: Managing Director



                                    LENDER

                                    FARM CREDIT BANK OF TEXAS


                                    By: /s/ Eric J. Paul
                                        ----------------------------------------
                                    Name: Eric J. Paul
                                    Title: Vice President



                                    LENDER

                                    FARM CREDIT SERVICES OF AMERICA, FLCA


                                    By: /s/ Steven L. Moore
                                        ----------------------------------------
                                    Name: Steven L. Moore
                                    Title: Vice President



                                    LENDER

                                    KZH CYPRESSTREE-1 LLC


                                    By: /s/ Susan Lee
                                        ----------------------------------------
                                    Name: Susan Lee
                                    Title: Authorized Agent



                                    LENDER

                                    KZH ING-2 LLC


                                    By: /s/ Susan Lee
                                        ----------------------------------------
                                    Name: Susan Lee
                                    Title: Authorized Agent



                                    LENDER

                                    KZH PONDVIEW LLC


                                    By: /s/ Susan Lee
                                        ----------------------------------------
                                    Name: Susan Lee
                                    Title: Authorized Agent



                                    LENDER

                                    KZH RIVERSIDE LLC


                                    By: /s/ Dorian Herrera
                                        ----------------------------------------
                                    Name: Dorian Herrera
                                    Title: Authorized Agent



                                    LENDER

                                    KZH SOLEIL LLC


                                    By: /s/ Dorian Herrera
                                        ----------------------------------------
                                    Name: Dorian Herrera
                                    Title: Authorized Agent



                                    LENDER

                                    KZH SOLEIL-2 LLC


                                    By: /s/ Dorian Herrera
                                        ----------------------------------------
                                    Name: Dorian Herrera
                                    Title: Authorized Agent



                                    LENDER

                                    KZH STERLING LLC


                                    By: /s/ Susan Lee
                                        ----------------------------------------
                                    Name: Susan Lee
                                    Title: Authorized Agent



                                    LENDER

                                    NATEXIS BANQUES POPULAIRES


                                    By: /s/ Tefta Ghilaga
                                        ----------------------------------------
                                    Name: Tefta Ghilaga
                                    Title: Vice President


                                    By: /s/ Kristen Brainard
                                        ----------------------------------------
                                    Name: Kristen Brainard
                                    Title: Associate



                                    LENDER

                                    NORTHWEST FARM CREDIT SERVICES, PCA


                                    By: /s/ Jim D. Allen
                                        ----------------------------------------
                                    Name: Jim D. Allen
                                    Title: Senior Vice President



                                    LENDER

                                    OAK BROOK BANK


                                    By: /s/ Henry Wessel
                                        ----------------------------------------
                                    Name: Henry Wessel
                                    Title: Vice President



                                    LENDER

                                    SUN TRUST BANK


                                    By: /s/ Michael Lapresi
                                        ----------------------------------------
                                    Name: Michael Lapresi
                                    Title: Director



                                    LENDER

                                    UBS LOAN FINANCE LLC


                                    By: /s/ Patricia O'Kicki
                                        ----------------------------------------
                                    Name: Patricia O'Kicki
                                    Title: Director


                                    By: /s/ Joselin Fernandes
                                        ----------------------------------------
                                    Name: Joselin Fernandes
                                    Title: Associate Director - Banking Products
                                           Services, U.S.



                                                                     EXHIBIT C-1

                                FORM OF TERM NOTE

                                                                     -----------

          FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to                       or registered assigns (the "Lender"), in
          ---------------------
accordance with the provisions of the Agreement (as hereinafter defined), the
aggregate unpaid principal amount of each Term Loan made by the Lender to the
Borrower under that certain Credit Agreement, dated as of November [_],2003 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Agreement;" the terms defined therein being used herein as
therein defined), among the Borrower, Holdings, the Lenders from time to time
party thereto, Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender, and the other Agents named therein.

          The Borrower promises to pay interest on the aggregate unpaid
principal amount of each Term Loan made by the Lender to the Borrower under the
Agreement from the date of such Loan until such principal amount is paid in
full, at such interest rates and at such times as provided in the Agreement. All
payments of principal and interest shall be made to the Administrative Agent for
the account of the Lender in Dollars in immediately available funds at the
Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Agreement.

          This Term Note is one of the Term Notes referred to in the Agreement,
is entitled to the benefits thereof and may be prepaid in whole or in part
subject to the terms and conditions provided therein. This Term Note is also
entitled to the benefits of the Guaranty and is secured by the Collateral. Upon
the occurrence and continuation of one or more of the Events of Default
specified in the Agreement, all amounts then remaining unpaid on this Term Note
shall become, or may be declared to be, immediately due and payable all as
provided in the Agreement. Term Loans made by the Lender shall be evidenced by
one or more loan accounts or records maintained by the Lender in the ordinary
course of business. The Lender may also attach schedules to this Term Note and
endorse thereon the date, amount and maturity of its Loans and payments with
respect thereto.

          The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Term Note.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                  Form of Note
                                       1



          THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

                                       MICHAEL FOODS, INC.


                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                  Form of Note
                                       1



                     LOANS AND PAYMENTS WITH RESPECT THERETO

                                            Amount of     Outstanding
                                End of     Principal or    Principal
        Type of    Amount of   Interest   Interest Paid     Balance     Notation
Date   Loan Made   Loan Made    Period      This Date      This Date     Made By
- ----   ---------   ---------   --------   -------------   -----------   --------

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                                  Form of Note
                                       1



                                                                     EXHIBIT C-2

                          FORM OF REVOLVING CREDIT NOTE

                                                                     -----------

          FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to                       or registered assigns (the "Lender"), in
          ---------------------
accordance with the provisions of the Agreement (as hereinafter defined), the
aggregate unpaid principal amount of each Revolving Credit Loan from time to
time made by the Lender to the Borrower under that certain Credit Agreement,
dated as of November [   ],2003 (as amended, restated, extended, supplemented or
                      ---
otherwise modified in writing from time to time, the "Agreement;" the terms
defined therein being used herein as therein defined), among the Borrower,
Holdings, the Lenders from time to time party thereto, Bank of America, N.A., as
Administrative Agent, L/C Issuer and Swing Line Lender, and the other Agents
named therein.

          The Borrower promises to pay interest on the aggregate unpaid
principal amount of each Revolving Credit Loan from time to time made by the
Lender to the Borrower under the Agreement from the date of such Loan until such
principal amount is paid in full, at such interest rates and at such times as
provided in the Agreement. All payments of principal and interest shall be made
to the Administrative Agent (or, in the case of Swing Line Loans, to the Swing
Line Lender) for the account of the Lender in Dollars in immediately available
funds at the Administrative Agent's Office. If any amount is not paid in full
when due hereunder, such unpaid amount shall bear interest, to be paid upon
demand, from the due date thereof until the date of actual payment (and before
as well as after judgment) computed at the per annum rate set forth in the
Agreement.

          This Revolving Credit Note is one of the Revolving Credit Notes
referred to in the Agreement, is entitled to the benefits thereof and may be
prepaid in whole or in part subject to the terms and conditions provided
therein. This Revolving Credit Note is also entitled to the benefits of the
Guaranty and is secured by the Collateral. Upon the occurrence and continuation
of one or more of the Events of Default specified in the Agreement, all amounts
then remaining unpaid on this Revolving Credit Note shall become, or may be
declared to be, immediately due and payable all as provided in the Agreement.
Revolving Credit Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Revolving Credit Note and endorse
thereon the date, amount and maturity of its Revolving Credit Loans and payments
with respect thereto.

          The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Revolving Credit Note.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                  Form of Note
                                       1



          THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

                                       MICHAEL FOODS, INC.


                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                  Form of Note
                                       2



                     LOANS AND PAYMENTS WITH RESPECT THERETO

                                            Amount of     Outstanding
                                End of     Principal or    Principal
        Type of    Amount of   Interest   Interest Paid     Balance     Notation
Date   Loan Made   Loan Made    Period      This Date      This Date     Made By
- ----   ---------   ---------   --------   -------------   -----------   --------

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

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

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

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                                  Form of Note
                                       3



                                                                     EXHIBIT F-1

                             FORM OF PARENT GUARANTY

          PARENT GUARANTY dated as of November 20, 2003 (the "Guaranty") made by
THL FOOD PRODUCTS HOLDING CO., a Delaware corporation (the "Guarantor"), in
favor of the Secured Parties (as defined in the Credit Agreement referred to
below).

                              PRELIMINARY STATEMENT

          THL Food Products Co., a Delaware corporation (the "Borrower"), and a
wholly owned subsidiary of the Guarantor, is party to a Credit Agreement dated
as of November 20, 2003 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"; the capitalized
terms defined therein and not otherwise defined herein being used herein as
therein defined) with the Guarantor, certain Lenders party thereto, Bank of
America, N.A., as the L/C Issuer, the Swing Line Lender and the Administrative
Agent, and the other Agents named therein. The Guarantor will derive substantial
direct and indirect benefits from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Loans and the issuance
of Letters of Credit by the Lenders under the Credit Agreement and the entry by
the Hedge Banks into Secured Hedge Agreements from time to time that the
Guarantor shall have executed and delivered this Guaranty.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans and to issue Letters of Credit under the Credit
Agreement and the Hedge Banks to enter into Secured Hedge Agreements from time
to time, the Guarantor hereby agrees as follows:

          Section 1. Guaranty. (a) The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment, whether at
scheduled maturity or by acceleration, demand or otherwise, of all Obligations
of each other Loan Party now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premiums, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses incurred by the
Administrative Agent or any other Secured Party in enforcing any rights under
this Guaranty or any other Loan Document (including reasonable fees, expenses
and disbursements of any law firm or other external counsel to the
Administrative Agent). Without limiting the generality of the foregoing, the
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any other Loan Party to any Secured
Party under or in respect of the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.

          (b) The Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Secured Party under
this Guaranty or the Subsidiary Guaranty or any other guaranty, the Guarantor
will contribute, to the maximum extent



permitted by law, such amounts to each other guarantor so as to maximize the
aggregate amount paid to the Secured Parties under or in respect of the Loan
Documents.

          Section 2. Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party with respect thereto. The Obligations of the Guarantor under or in
respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and the Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

          (a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;

          (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other Obligations
of any other Loan Party under or in respect of the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any of
its Subsidiaries or otherwise;

          (c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of, or
consent to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

          (d) any manner of application of Collateral or any other collateral,
or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner
of sale or other disposition of any Collateral or any other collateral for all
or any of the Guaranteed Obligations or any other Obligations of any Loan Party
under the Loan Documents or any other assets of any Loan Party or any of its
Subsidiaries;

          (e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;

          (f) any failure of any Secured Party to disclose to any Loan Party any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party now or
hereafter known to such Secured Party (the Guarantor waiving any duty on the
part of the Secured Parties to disclose such information);

          (g) the failure of any other Person to execute or deliver any other
guaranty or agreement or the release or reduction of liability of any other
guarantor or surety with respect to the Guaranteed Obligations; or

                                       2



          (h) any other circumstance or any existence of or reliance on any
representation by any Secured Party that might otherwise constitute a defense
available to, or a discharge of, any Loan Party or any other guarantor or
surety.

          This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.

          Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Secured Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Loan Party
or any other Person or any Collateral.

          (b) The Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.

          (c) The Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Secured Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of the Guarantor or other rights of the
Guarantor to proceed against any of the other Loan Parties, any other guarantor
or any other Person or any Collateral and (ii) any defense based on any right of
set-off or counterclaim against or in respect of the Obligations of the
Guarantor hereunder.

          (d) The Guarantor acknowledges that the Administrative Agent may, in
accordance with the Loan Documents, without notice to or demand upon the
Guarantor and without affecting the liability of the Guarantor under this
Guaranty, foreclose under any mortgage by nonjudicial sale, and the Guarantor
hereby waives any defense to the recovery by the Administrative Agent and the
other Secured Parties against the Guarantor of any deficiency after such
nonjudicial sale and any defense or benefits that may be afforded by applicable
law.

          (e) The Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Secured Party to disclose to the Guarantor any matter,
fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party or any
of its Subsidiaries now or hereafter known by such Secured Party.

          (f) The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.

                                       3



          Section 4. Subrogation. The Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower, any other Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantor's Obligations under or in respect of this Guaranty or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Secured Party against the Borrower,
any other Loan Party or any other insider guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrower, any other Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, all Letters of Credit and all
Secured Hedge Agreements shall have expired or been terminated and the
Commitments shall have expired or been terminated. If any amount shall be paid
to the Guarantor in violation of the immediately preceding sentence at any time
prior to the latest of (a) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (b) the Maturity
Date and (c) the latest date of expiration or termination of all Letters of
Credit and all Secured Hedge Agreements, such amount shall be received and held
in trust for the benefit of the Secured Parties, shall be segregated from other
property and funds of the Guarantor and shall forthwith be paid or delivered to
the Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If (i) the Guarantor shall make payment to any
Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash, (iii) the Maturity Date shall have occurred and
(iv) all Letters of Credit and all Secured Hedge Agreements shall have expired
or been terminated, the Secured Parties will, at the Guarantor's request and
expense, execute and deliver to the Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by the Guarantor pursuant to this
Guaranty.

          Section 5. Payments Free and Clear of Taxes, Etc. Any and all payments
by the Guarantor under this Guaranty or any other Loan Document shall be made,
in accordance with the terms of the Credit Agreement, free and clear of and
without deduction for any and all present or future Taxes.

          Section 6. Representations and Warranties. The Guarantor hereby makes
each representation and warranty made in the Loan Documents by the Borrower with
respect to the Guarantor and the Guarantor hereby further represents and
warrants as follows:

          (a) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.

                                       4



          (b) The Guarantor has, independently and without reliance upon any
Secured Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty and each other Loan Document to which it is or is to be a party, and
the Guarantor has established adequate means of obtaining from each other Loan
Party on a continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of
such other Loan Party.

          Section 7. Covenants. The Guarantor covenants and agrees that, so long
as any part of the Guaranteed Obligations shall remain unpaid, any Letter of
Credit shall be outstanding, any Lender shall have any Commitment or any Secured
Hedge Agreement shall be in effect, the Guarantor will perform and observe, and
cause the Borrower and each of its Subsidiaries to perform and observe, all of
the terms, covenants and agreements set forth in the Loan Documents on its or
their part to be performed or observed or that the Borrower has agreed to cause
its Subsidiaries to perform or observe

          Section 8. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty and no consent to any departure by the Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent, the Required Lenders and the Guarantor, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all of the Secured Parties
(other than any Lender that is, at such time, a Defaulting Lender), (a) reduce
or limit the obligations of the Guarantor hereunder, release the Guarantor
hereunder or otherwise limit the Guarantor's liability with respect to the
Obligations owing to the Secured Parties under or in respect of the Loan
Documents, (b) postpone any date fixed for payment hereunder or (c) change any
provision of this Section 8.

          Section 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication or facsimile transmission) and mailed, telegraphed, telecopied,
telexed, faxed or delivered to it, if to the Guarantor, addressed to it in care
of the Borrower at the Borrower's address specified in Section 10.02 of the
Credit Agreement, if to any Agent or any Lender, at its address specified in
Section 10.02 of the Credit Agreement, if to any Hedge Bank, at its address
specified in the Secured Hedge Agreement to which it is a party, or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall be
deemed to be given or made at such time as shall be set forth in Section 10.02
of the Credit Agreement. Delivery by telecopier of an executed counterpart of a
signature page to any amendment or waiver of any provision of this Guaranty
shall be effective as delivery of an original executed counterpart thereof.

          Section 10. No Waiver; Remedies. No failure on the part of any Secured
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

                                       5



          Section 11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 8.02 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of said Section 8.02, each Agent and each Lender and each of
their respective 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 indebtedness at any time owing by such Agent, such Lender or such
Affiliate to or for the credit or the account of the Guarantor against any and
all of the Obligations of the Guarantor now or hereafter existing under the Loan
Documents, irrespective of whether such Agent or such Lender shall have made any
demand under this Guaranty or any other Loan Document and although such
Obligations may be unmatured. Each Agent and each Lender agrees promptly to
notify the Guarantor after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Agent and each Lender and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Agent, such Lender and their respective Affiliates may have.

          Section 12. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty, (ii)
the Maturity Date and (iii) the latest date of expiration or termination of all
Letters of Credit and all Secured Hedge Agreements, (b) be binding upon the
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Secured Parties and their successors, transferees and
assigns. Without limiting the generality of clause (c) of the immediately
preceding sentence, any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Loans owing to it
and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party herein or otherwise, in each case as and to the extent
provided in Section 10.07 of the Credit Agreement. The Guarantor shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Secured Parties.

          Section 13. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

          Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE

                                       6



COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS
GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

          (c) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, CLAIM, DEMAND OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.

                                       7



          IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                       THL FOOD PRODUCTS HOLDING CO.

                                       By
                                           -------------------------------------
                                           Title: Chief Financial Officer and
                                                  Treasurer



                                                                     EXHIBIT F-2

                           FORM OF SUBSIDIARY GUARANTY

          SUBSIDIARY GUARANTY dated as of November 20, 2003 (the "Guaranty")
made by the Persons listed on the signature pages hereof under the caption
"Subsidiary Guarantors" and the Additional Guarantors (as defined in Section
8(b)) (such Persons so listed and the Additional Guarantors being, collectively,
the "Guarantors" and, individually, each a "Guarantor") in favor of the Secured
Parties (as defined in the Credit Agreement referred to below).

                              PRELIMINARY STATEMENT

          THL Food Products Co., a Delaware corporation (the "Borrower"), is
party to a Credit Agreement dated as of November 20, 2003 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"; the capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with THL Food Products Holding Co.,
certain Lenders party thereto, Bank of America, N.A., as the L/C Issuer, the
Swing Line Lender and the Administrative Agent, and the other Agents named
therein. Each Guarantor may receive, directly or indirectly, a portion of the
proceeds of the Loans under the Credit Agreement and will derive substantial
direct and indirect benefits from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Loans and the issuance
of Letters of Credit by the Lenders under the Credit Agreement and the entry by
the Hedge Banks into Secured Hedge Agreements from time to time that each
Guarantor shall have executed and delivered this Guaranty.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans and to issue Letters of Credit under the Credit
Agreement and the Hedge Banks to enter into Secured Hedge Agreements from time
to time, each Guarantor, jointly and severally with each other Guarantor, hereby
agrees as follows:

          Section 15. Guaranty; Limitation of Liability. (a) Each Guarantor
hereby, jointly and severally, absolutely, unconditionally and irrevocably
guarantees the punctual payment, whether at scheduled maturity or by
acceleration, demand or otherwise, of all Obligations of each other Loan Party
now or hereafter existing under or in respect of the Loan Documents (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premiums,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
expenses incurred by the Administrative Agent or any other Secured Party in
enforcing any rights under this Guaranty or any other Loan Document (including
reasonable fees, expenses and disbursements of any law firm or other external
counsel to the Administrative Agent). Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Loan Party to any Secured Party under or in respect of the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such other Loan
Party.



          (b) Each Guarantor, and by its acceptance of this Guaranty, the
Administrative Agent and each other Secured Party, hereby confirms that it is
the intention of all such Persons that this Guaranty and the Obligations of each
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Administrative Agent, the other Secured Parties and the Guarantors hereby
irrevocably agree that the Obligations of each Guarantor under this Guaranty at
any time shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "Bankruptcy Law" means any
proceeding of the type referred to in Section 8.01(f) of the Credit Agreement or
Title 11, U.S. Code, or any similar foreign, federal or state law for the relief
of debtors.

          (c) Each Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Secured Party under
this Guaranty or the Parent Guaranty or any other guaranty, such Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Guarantor and Holdings so as to maximize the aggregate amount paid to the
Secured Parties under or in respect of the Loan Documents.

          Section 16. Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party with respect thereto. The Obligations of each Guarantor under or
in respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

          (a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;

          (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other Obligations
of any other Loan Party under or in respect of the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any of
its Subsidiaries or otherwise;

          (c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of, or
consent to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

                                       2



          (d) any manner of application of Collateral or any other collateral,
or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner
of sale or other disposition of any Collateral or any other collateral for all
or any of the Guaranteed Obligations or any other Obligations of any Loan Party
under the Loan Documents or any other assets of any Loan Party or any of its
Subsidiaries;

          (e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;

          (f) any failure of any Secured Party to disclose to any Loan Party any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party now or
hereafter known to such Secured Party (each Guarantor waiving any duty on the
part of the Secured Parties to disclose such information);

          (g) the failure of any other Person to execute or deliver this
Guaranty, any Guaranty Supplement (as hereinafter defined) or any other guaranty
or agreement or the release or reduction of liability of any Guarantor or other
guarantor or surety with respect to the Guaranteed Obligations; or

          (h) any other circumstance or any existence of or reliance on any
representation by any Secured Party that might otherwise constitute a defense
available to, or a discharge of, any Loan Party or any other guarantor or
surety.

          This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.

          Section 17. Waivers and Acknowledgments. (a) Each Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Secured Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Loan Party
or any other Person or any Collateral.

          (b) Each Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.

          (c) Each Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Secured Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such

                                       3



Guarantor or other rights of such Guarantor to proceed against any of the other
Loan Parties, any other guarantor or any other Person or any Collateral and (ii)
any defense based on any right of set-off or counterclaim against or in respect
of the Obligations of such Guarantor hereunder.

          (d) Each Guarantor acknowledges that the Administrative Agent may, in
accordance with the Loan Documents, without notice to or demand upon such
Guarantor and without affecting the liability of such Guarantor under this
Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor
hereby waives any defense to the recovery by the Administrative Agent and the
other Secured Parties against such Guarantor of any deficiency after such
nonjudicial sale and any defense or benefits that may be afforded by applicable
law.

          (e) Each Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Secured Party to disclose to such Guarantor any matter,
fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party or any
of its Subsidiaries now or hereafter known by such Secured Party.

          (f) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in Section 2 and this Section 3
are knowingly made in contemplation of such benefits.

          Section 18. Subrogation. Each Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower, any other Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's Obligations under or in respect of this Guaranty or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Secured Party against the Borrower,
any other Loan Party or any other insider guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrower, any other Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, all Letters of Credit and all
Secured Hedge Agreements shall have expired or been terminated and the
Commitments shall have expired or been terminated. If any amount shall be paid
to any Guarantor in violation of the immediately preceding sentence at any time
prior to the latest of (a) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (b) the Maturity
Date and (c) the latest date of expiration or termination of all Letters of
Credit and all Secured Hedge Agreements, such amount shall be received and held
in trust for the benefit of the Secured Parties, shall be segregated from other
property and funds of such Guarantor and shall forthwith be paid or delivered to
the Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If

                                       4



(i) any Guarantor shall make payment to any Secured Party of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash, (iii)
the Maturity Date shall have occurred and (iv) all Letters of Credit and all
Secured Hedge Agreements shall have expired or been terminated, the Secured
Parties will, at such Guarantor's request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Guaranty.

          Section 19. Payments Free and Clear of Taxes, Etc. Any and all
payments by any Guarantor under this Guaranty or any other Loan Document shall
be made, in accordance with the terms of the Credit Agreement, free and clear of
and without deduction for any and all present or future Taxes.

          Section 20. Representations and Warranties. Each Guarantor hereby
makes each representation and warranty made in the Loan Documents by the
Borrower with respect to such Guarantor and each Guarantor hereby further
represents and warrants as follows:

          (a) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.

          (b) Such Guarantor has, independently and without reliance upon any
Secured Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty and each other Loan Document to which it is or is to be a party, and
such Guarantor has established adequate means of obtaining from each other Loan
Party on a continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of
such other Loan Party.

          Section 21. Covenants. Each Guarantor covenants and agrees that, so
long as any part of the Guaranteed Obligations shall remain unpaid, any Letter
of Credit shall be outstanding, any Lender shall have any Commitment or any
Secured Hedge Agreement shall be in effect, such Guarantor will perform and
observe, and cause each of its Subsidiaries to perform and observe, all of the
terms, covenants and agreements set forth in the Loan Documents on its or their
part to be performed or observed or that the Borrower has agreed to cause such
Guarantor or such Subsidiaries to perform or observe.

          Section 22. Amendments, Guaranty Supplements, Etc. (a) No amendment or
waiver of any provision of this Guaranty and no consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent, the Required Lenders and the
Guarantors and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all of the Secured Parties (other than any Lender that is, at such
time, a Defaulting Lender), (a) reduce or limit the obligations of any Guarantor
hereunder, release any Guarantor hereunder or otherwise limit any Guarantor's
liability with respect to the Obligations owing to the Secured

                                       5



Parties under or in respect of the Loan Documents except as provided in the next
succeeding sentence, (b) postpone any date fixed for payment hereunder or (c)
change any provision of this Section 8. Upon the sale of a Guarantor to the
extent permitted in accordance with the terms of the Loan Documents, such
Guarantor shall be automatically released from this Guaranty.

          (b) Upon the execution and delivery by any Person of a guaranty
supplement in substantially the form of Exhibit A hereto (each, a "Guaranty
Supplement"), (i) such Person shall be referred to as an "Additional Guarantor"
and shall become and be a Guarantor hereunder, and each reference in this
Guaranty to a "Guarantor" shall also mean and be a reference to such Additional
Guarantor, and each reference in any other Loan Document to a "Subsidiary
Guarantor" shall also mean and be a reference to such Additional Guarantor, and
(ii) each reference herein to "this Guaranty", "hereunder", "hereof" or words of
like import referring to this Guaranty, and each reference in any other Loan
Document to the "Subsidiary Guaranty", "thereunder", "thereof" or words of like
import referring to this Guaranty, shall mean and be a reference to this
Guaranty as supplemented by such Guaranty Supplement.

          Section 23. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication or facsimile transmission) and mailed, telegraphed,
telecopied, telexed, faxed or delivered to it, if to any Guarantor, addressed to
it in care of the Borrower at the Borrower's address specified in Section 10.02
of the Credit Agreement, if to any Agent or any Lender, at its address specified
in Section 10.02 of the Credit Agreement, if to any Hedge Bank, at its address
specified in the Secured Hedge Agreement to which it is a party, or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall be
deemed to be given or made at such time as shall be set forth in Section 10.02
of the Credit Agreement. Delivery by telecopier of an executed counterpart of a
signature page to any amendment or waiver of any provision of this Guaranty or
of any Guaranty Supplement to be executed and delivered hereunder shall be
effective as delivery of an original executed counterpart thereof.

          Section 24. No Waiver; Remedies. No failure on the part of any Secured
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

          Section 25. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 8.02 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of said Section 8.02, each Agent and each Lender and each of
their respective 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 indebtedness at any time owing by such Agent, such Lender or such
Affiliate to or for the credit or the account of any Guarantor against any and
all of the Obligations of such Guarantor now or hereafter existing under the
Loan Documents, irrespective of whether such Agent or such Lender shall have
made any demand under this Guaranty or any other Loan Document and although such

                                       6



Obligations may be unmatured. Each Agent and each Lender agrees promptly to
notify such Guarantor after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Agent and each Lender and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Agent, such Lender and their respective Affiliates may have.

          Section 26. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty, (ii)
the Maturity Date and (iii) the latest date of expiration or termination of all
Letters of Credit and all Secured Hedge Agreements, (b) be binding upon each
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Secured Parties and their successors, transferees and
assigns. Without limiting the generality of clause (c) of the immediately
preceding sentence, any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Loans owing to it
and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party herein or otherwise, in each case as and to the extent
provided in Section 10.07 of the Credit Agreement. No Guarantor shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Secured Parties.

          Section 27. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

          Section 28. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO.

                                       7



          (c) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

                                       8



          IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.


                                      MICHAEL FOODS OF DELAWARE, INC.


                                      By
                                         --------------------------------------
                                         Title: Executive Vice President,
                                         Chief Financial Officer and Treasurer


                                      CASA TRUCKING, INC.


                                      By
                                         --------------------------------------
                                         Title: Chief Financial Officer and
                                         Vice President - Finance


                                      CRYSTAL FARMS REFRIGERATED
                                      DISTRIBUTION COMPANY


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance


                                      KMS DAIRY, INC.


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance


                                      MINNESOTA PRODUCTS, INC.


                                      By
                                         --------------------------------------
                                         Title: Chief Financial Officer and
                                         Vice President - Finance


                                      NORTHERN STAR CO.


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance


                                      PAPETTI'S HYGRADE EGG PRODUCTS, INC.


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance


                                      M.G. WALDBAUM COMPANY


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance

                                       9



                                      FARM FRESH FOODS, INC.


                                      By
                                         --------------------------------------
                                         Title: Chief Financial Officer and
                                         Vice President - Finance


                                      PAPETTI ELECTROHEATING CORPORATION


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance


                                      WFC, INC.


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance


                                      WISCO FARM COOPERATIVE


                                      By
                                         --------------------------------------
                                         Title: Vice President - Finance

                                       10



                                                                       Exhibit A
                                                                          To The
                                                             Subsidiary Guaranty

                     FORM OF SUBSIDIARY GUARANTY SUPPLEMENT

                                                              --------- --, ----

          Bank of America, N.A., as Administrative Agent
[Address of Administrative Agent]

          Attention:
                     ---------

              Credit Agreement dated as of November 20, 2003 among
         THL Food Products Co., a Delaware corporation (the "Borrower"),
                         THL Food Products Holding Co.,
                   the Lenders party to the Credit Agreement,
                             Bank of America, N.A.,
         as the L/C Issuer, Swing Line Lender and Administrative Agent,
               and the other Agents party to the Credit Agreement

          Ladies and Gentlemen:

          Reference is made to the above-captioned Credit Agreement and to the
Subsidiary Guaranty referred to therein (such Subsidiary Guaranty, as in effect
on the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, together with this Subsidiary Guaranty Supplement
(the "Guaranty Supplement"), being the "Subsidiary Guaranty"). The capitalized
terms defined in the Subsidiary Guaranty or in the Credit Agreement and not
otherwise defined herein are used herein as therein defined.

          Section 1. Guaranty; Limitation of Liability. (a) The undersigned
hereby, jointly and severally with the other Guarantors absolutely,
unconditionally and irrevocably guarantees the punctual payment, whether at
scheduled maturity or by acceleration, demand or otherwise, of all Obligations
of each other Loan Party now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premium, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Guaranty
Supplement, the Subsidiary Guaranty or any other Loan Document. Without limiting
the generality of the foregoing, the undersigned's liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
any other Loan Party to any Secured Party under or in respect of the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
such other Loan Party.(b) The undersigned, and by its acceptance of this
Guaranty Supplement, the Administrative Agent and



each other Secured Party, hereby confirms that it is the intention of all such
Persons that this Guaranty Supplement, the Subsidiary Guaranty and the
Obligations of the undersigned hereunder and thereunder not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to this Guaranty
Supplement, the Subsidiary Guaranty and the Obligations of the undersigned
hereunder and thereunder. To effectuate the foregoing intention, the
Administrative Agent, the other Secured Parties and the undersigned hereby
irrevocably agree that the Obligations of the undersigned under this Guaranty
Supplement and the Subsidiary Guaranty at any time shall be limited to the
maximum amount as will result in the Obligations of the undersigned under this
Guaranty Supplement and the Subsidiary Guaranty not constituting a fraudulent
transfer or conveyance.

          (c) The undersigned hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Secured Party under
this Guaranty Supplement, the Subsidiary Guaranty, the Parent Guaranty or any
other guaranty, the undersigned will contribute, to the maximum extent permitted
by applicable law, such amounts to each other Guarantor and each other guarantor
so as to maximize the aggregate amount paid to the Secured Parties under or in
respect of the Loan Documents.

          Section 2. Obligations Under the Guaranty. The undersigned hereby
agrees, as of the date first above written, to be bound as a Guarantor by all of
the terms and conditions of the Subsidiary Guaranty to the same extent as each
of the other Guarantors thereunder. The undersigned further agrees, as of the
date first above written, that each reference in the Subsidiary Guaranty to an
"Additional Guarantor" or a "Guarantor" shall also mean and be a reference to
the undersigned, and each reference in any other Loan Document to a "Subsidiary
Guarantor" or a "Loan Party" shall also mean and be a reference to the
undersigned.Section 3. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 6 of the Subsidiary
Guaranty to the same extent as each other Guarantor.Section 4. Delivery by
Telecopier. Delivery of an executed counterpart of a signature page to this
Guaranty Supplement by telecopier shall be effective as delivery of an original
executed counterpart of this Guaranty Supplement.Section 5. Governing Law;
Jurisdiction; Waiver of Jury Trial, Etc. (a) This Guaranty Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY SUPPLEMENT, EACH
GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

          (c) THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY CLAIM, DEMAND, ACTION OR CAUSE OF

                                       12



ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING
TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

                                                  Very truly yours,
                                                  [NAME OF ADDITIONAL GUARANTOR]


                                                  By
                                                     ---------------------------

                                       13



                                                                       EXHIBIT G

                           FORM OF SECURITY AGREEMENT

          SECURITY AGREEMENT dated November 20, 2003 made by THL FOOD PRODUCTS
CO., a Delaware corporation (the "Borrower"), THL FOOD PRODUCTS HOLDING CO., a
Delaware corporation ("Holdings"), the other Persons listed on the signature
pages hereof and the Additional Grantors (as hereinafter defined) (the Borrower,
Holdings, the Persons so listed and the Additional Grantors being, collectively,
the "Grantors"), to BANK OF AMERICA, N.A., as administrative agent (in such
capacity, together with any successor administrative agent, the "Administrative
Agent") for the Secured Parties.

          PRELIMINARY STATEMENTS.

          (1) The Borrower has entered into a Credit Agreement dated of even
date herewith (said Agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement") with Holdings, the Lenders, the L/C Issuer and the Agents.

          (2) Pursuant to the Credit Agreement, the Grantors are entering into
this Agreement in order to grant to the Administrative Agent for the ratable
benefit of the Secured Parties a security interest in the Collateral (as
hereinafter defined).

          (3) It is a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Lenders under the Credit Agreement and the
entry into Secured Hedge Agreements by the Hedge Banks from time to time that
the Grantors shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.

          (4) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.

          (5) Terms defined in the Credit Agreement and not otherwise defined in
this Agreement are used in this Agreement as defined in the Credit Agreement.
Further, unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9 (including Accounts,
Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Account,
Commodity Contract, Deposit Accounts, Documents, Equipment, Farm Products,
Financial Assets, Fixtures, General Intangibles, Goods, Instruments, Inventory,
Investment Property, Letter of Credit Rights, Securities Accounts, Securities
Intermediary, Security, Security Entitlements and Supporting Obligations). "UCC"
means the Uniform Commercial Code as defined in the Credit Agreement.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and to induce the Hedge Banks to enter into Secured Hedge Agreements
from time to time, each Grantor hereby agrees with the Administrative Agent for
the ratable benefit of the Secured Parties as follows:



          Section 6. Grant of Security. Each Grantor hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in, such Grantor's right, title and interest in and to the following,
in each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the "Collateral"):

          (a) all Accounts;

          (b) all cash and Cash Equivalents;

          (c) all Chattel Paper;

          (d) all Commercial Tort Claims (including, without limitation, the
Commercial Tort Claims set forth on Schedule IV hereto);

          (e) all Deposit Accounts;

          (f) all Documents;

          (g) all Equipment;

          (h) all Farm Products;

          (i) all Fixtures;

          (j) all General Intangibles;

          (k) all Goods;

          (l) all Instruments;

          (m) all Inventory;

          (n) all Letter-of-Credit Rights;

          (o) the following (the "Security Collateral"):

          (i) all indebtedness evidenced by promissory notes or other
     instruments from time to time owed to such Grantor (the "Pledged Debt"),
     and all interest, cash, instruments and other property from time to time
     received, receivable or otherwise distributed in respect of or in exchange
     for any or all of the Pledged Debt;

          (ii) all Equity Interests from time to time acquired, owned or held by
     such Grantor in any manner, including, without limitation, the Equity
     Interests of each Grantor set forth opposite such Grantor's name on and
     otherwise described on Schedule II (such Equity Interests, together with
     the Pledged Equity, being the "Pledged Equity"), and the certificates, if
     any, representing such additional shares or units or other Equity
     Interests, and all dividends, distributions, return of capital, cash,
     instruments and other property from time to time received, receivable or
     otherwise distributed in respect of or in

                                        2



     exchange for any or all of such shares or other Equity Interests and all
     subscription warrants, rights or options issued thereon or with respect
     thereto; provided that such Grantor shall not be required to pledge, and
     the terms "Pledged Equity" and "Security Collateral" used in this Agreement
     shall not include any Equity Interests in any Foreign Subsidiary acquired,
     owned or otherwise held by such Grantor which, when aggregated with all of
     the other shares of stock in such Foreign Subsidiary pledged by such
     Grantor, would result in more than 65% of the shares of stock in such
     Foreign Subsidiary entitled to vote (within the meaning of Treasury
     Regulation Section 1.956-2(c)(2) promulgated under the Code) (the "Voting
     Foreign Stock") being pledged to the Administrative Agent, on behalf of the
     Secured Parties under this Agreement; provided, further, that all of the
     shares of stock or units or other Equity Interests in such Foreign
     Subsidiary not entitled to vote (within the meaning of Treasury Regulation
     Section 1.956-2(c)(2) promulgated under the Code) (the "Non-Voting Foreign
     Stock") shall be pledged by such Grantor; and

          (iii) all Investment Property and all Financial Assets, and all
     dividends, distributions, return of capital, interest, cash, instruments
     and other property from time to time received, receivable or otherwise
     distributed in respect of or in exchange therefor and all subscription
     warrants, rights or options issued thereon or with respect thereto;

          (p) all contracts and agreements between any Grantor and one or more
additional parties (including, without limitation, any Swap Contracts, licensing
agreements and any partnership agreements, joint venture agreements, limited
liability company agreements) and the IP Agreements (as hereinafter defined), in
each case as such agreements may be amended, amended and restated, supplemented
or otherwise modified from time to time (collectively, the "Assigned
Agreements"), including, without limitation, all rights of such Grantor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (all such Collateral being the "Agreement Collateral"), but
excluding any contract or agreement to the extent that (but only as long as) the
terms thereof prohibit the assignment of, or granting a security interest in,
such contract or agreement (it being understood and agreed, however, (i) that
notwithstanding the foregoing, all rights to payment for money due or to become
due pursuant to any such excluded contract shall be subject to the security
interests created by this Agreement and (ii) such excluded contact or agreement
shall otherwise be subject to the security interests created by this Agreement
upon receiving any necessary approvals or waivers permitting the assignment
thereof);

          (q) the following (collectively, the "Intellectual Property
Collateral"):

          (i) all patents, patent applications, utility models and statutory
     invention registrations, all inventions claimed or disclosed therein and
     all improvements thereto ("Patents");

          (ii) all trademarks, service marks, domain names, trade dress, logos,
     designs, slogans, trade names, business names, corporate names and other
     source identifiers, whether registered or unregistered (provided that no
     security interest shall be granted in United States intent-to-use trademark
     applications to the extent that, and solely during the period in which, the
     grant of a security interest therein would impair the validity or

                                       3



     enforceability of such intent-to-use trademark applications under
     applicable federal law), together, in each case, with the goodwill
     symbolized thereby ("Trademarks");

          (iii) all copyrights, including, without limitation, copyrights in
     Computer Software (as hereinafter defined), internet web sites and the
     content thereof, whether registered or unregistered ("Copyrights");

          (iv) all computer software, programs and databases (including, without
     limitation, source code, object code and all related applications and data
     files), firmware and documentation and materials relating thereto, together
     with any and all maintenance rights, service rights, programming rights,
     hosting rights, test rights, improvement rights, renewal rights and
     indemnification rights and any substitutions, replacements, improvements,
     error corrections, updates and new versions of any of the foregoing
     ("Computer Software");

          (v) all confidential and proprietary information, including, without
     limitation, know-how, trade secrets, manufacturing and production processes
     and techniques, inventions, research and development information, databases
     and data, including, without limitation, technical data, financial,
     marketing and business data, pricing and cost information, business and
     marketing plans and customer and supplier lists and information
     (collectively, "Trade Secrets"), and all other intellectual, industrial and
     intangible property of any type, including, without limitation, industrial
     designs and mask works;

          (vi) all registrations and applications for registration for any of
     the foregoing, including, without limitation, those registrations and
     applications for registration set forth in Schedule III hereto (as such
     Schedule III may be supplemented from time to time by supplements to this
     Agreement, each such supplement being substantially in the form of Exhibit
     C hereto (an "IP Security Agreement Supplement") executed by such Grantor
     to the Administrative Agent from time to time), together with all reissues,
     divisions, continuations, continuations-in-part, extensions, renewals and
     reexaminations thereof;

          (vii) all tangible embodiments of the foregoing, all rights in the
     foregoing provided by international treaties or conventions, all rights
     corresponding thereto throughout the world and all other rights of any kind
     whatsoever of such Grantor accruing thereunder or pertaining thereto;

          (viii) all agreements, permits, consents, orders and franchises
     relating to the license, development, use or disclosure of any of the
     foregoing to which such Grantor, now or hereafter, is a party or a
     beneficiary ("IP Agreements"); and

          (ix) any and all claims for damages and injunctive relief for past,
     present and future infringement, dilution, misappropriation, violation,
     misuse or breach with respect to any of the foregoing, with the right, but
     not the obligation, to sue for and collect, or otherwise recover, such
     damages;

                                       4



          (r) all books and records (including, without limitation, customer
lists, credit files, printouts and other computer output materials and records)
of such Grantor pertaining to any of the Collateral;

          (s) and all other tangible and intangible personal property of
whatever nature whether or not covered by Article 9 of the UCC; and

          (t) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and Supporting
Obligations relating to, any and all of the Collateral and, to the extent not
otherwise included, all payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral.

          Section 7. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations being the "Secured
Obligations").

          Section 8. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Agent of any of the rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

          Section 9. Delivery and Control of Security Collateral. (a) All
certificates representing or evidencing the Pledged Equity and all instruments
representing or evidencing the Pledged Debt in an aggregate principal amount in
excess of $3,000,000 shall be delivered to and held by or on behalf of the
Administrative Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the
Administrative Agent. During the continuation of an Event of Default, the
Administrative Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to i. transfer to or to register in the name of
the Administrative Agent or any of its nominees any or all of the Security
Collateral, subject only to the revocable rights specified in Section 11(a), 2.
exchange certificates or instruments representing or evidencing Security
Collateral for certificates or instruments of smaller or larger denominations,
and 3. convert Security Collateral consisting of financial assets credited to
any Securities Account to Security Collateral consisting of financial assets
held directly by the Administrative Agent, and to convert Security Collateral
consisting of financial assets held

                                       5



directly by the Administrative Agent to Security Collateral consisting of
financial assets credited to any Securities Account.

          (b) During the continuation of an Event of Default, promptly upon the
request of the Administrative Agent, with respect to any Security Collateral in
which any Grantor has any right, title or interest and that constitutes an
uncertificated security, such Grantor will cause the issuer thereof either (i)
to register the Administrative Agent as the registered owner of such security or
(ii) to agree in an authenticated record with such Grantor and the
Administrative Agent that such issuer will comply with instructions with respect
to such security originated by the Administrative Agent without further consent
of such Grantor, such authenticated record to be in form and substance
satisfactory to the Administrative Agent. During the continuation of an Event of
Default, with respect to any Security Collateral in which any Grantor has any
right, title or interest and that is not an uncertificated security, promptly
upon the request of the Administrative Agent, such Grantor will notify each such
issuer of Pledged Equity that such Pledged Equity is subject to the security
interest granted hereunder.

          (c) During the continuation of an Event of Default, promptly upon the
request of the Administrative Agent, such Grantor will notify each such issuer
of Pledged Debt that such Pledged Debt is subject to the security interest
granted hereunder.

          Section 10. Maintaining Electronic Chattel Paper, Transferable Records
and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims. So long
as any Loan or any other Obligation of any Loan Party under any Loan Document
shall remain unpaid, any Letter of Credit shall be outstanding, any Secured
Hedge Agreement shall be in effect or any Lender shall have any Commitment:

          (a) During the continuation of an Event of Default, promptly upon the
request of the Administrative Agent, each Grantor will maintain all (i)
Electronic Chattel Paper so that the Administrative Agent has control of the
Electronic Chattel Paper in the manner specified in Section 9-105 of the UCC and
(ii) all transferable records so that the Administrative Agent has control of
the transferable records in the manner specified in Section 16 of the Uniform
Electronic Transactions Act, as in effect in the jurisdiction governing such
transferable record ("UETA"); and

          (b) Each Grantor will give prompt notice to the Administrative Agent
of any Commercial Tort Claim that may arise in the future and will promptly
execute or otherwise authenticate a supplement to this Agreement, and otherwise
take all necessary action, to subject such Commercial Tort Claim to the first
priority security interest created under this Agreement.

          Section 11. Representations and Warranties. Each Grantor represents
and warrants as follows:

          (a) Such Grantor's exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth in Schedule I hereto. Such Grantor is located
(within the meaning of Section 9-307 of the UCC) and has its chief executive
office, in the state or jurisdiction set forth in Schedule I hereto. The
information set forth in Schedule I hereto with respect to such Grantor is true
and accurate in all material respects.

                                       6



          (b) All of the Equipment and Inventory of such Grantor are located at
the places specified therefor in Schedules 5.08(b), (c) and (d) to the Credit
Agreement. All Pledged Equity consisting of certificated securities have been
delivered to the Administrative Agent in accordance herewith.

          (c) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of others,
except for the security interest created under this Agreement, subject to Liens
permitted under Section 7.01 of the Credit Agreement.

          (d) The Pledged Equity pledged by such Grantor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable.

          (e) The Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Schedule II hereto.

          (f) Upon the filing of appropriate financing statements, all actions
necessary to perfect the security interest in the Collateral of such Grantor
created under this Agreement with respect to which a Lien may be perfected by
filing pursuant to the Uniform Commercial Code shall have been duly made or
taken and are in full force and effect, and this Agreement creates in favor of
the Administrative Agent for the benefit of the Secured Parties a valid and,
together with such filings and other actions, perfected first priority security
interest in such Collateral of such Grantor, securing the payment of the Secured
Obligations.

          (g) Except as could not reasonably be expected to have a Material
Adverse Effect as to itself and its Intellectual Property Collateral:

          (i) To the Grantor's knowledge, the operation of such Grantor's
     business as currently conducted or as contemplated to be conducted and the
     use of the Intellectual Property Collateral in connection therewith do not
     conflict with, infringe, misappropriate, dilute, misuse or otherwise
     violate the intellectual property rights of any third party.

          (ii) The Intellectual Property Collateral is subsisting and has not
     been adjudged invalid or unenforceable in whole or part, and to such
     Grantor's knowledge, is valid and enforceable. Such Grantor is not aware of
     any uses of any item of Intellectual Property Collateral that could be
     expected to lead to such item becoming invalid or unenforceable.

          (iii) Such Grantor has made or performed all filings, recordings and
     other acts and has paid all required fees and taxes to maintain and protect
     its interest in each and every item of Intellectual Property Collateral in
     full force and effect throughout the world, and to protect and maintain its
     interest therein including, without limitation, recordations of any of its
     interests in the Patents and Trademarks with the U.S. Patent and Trademark
     Office and in corresponding national and international patent offices, and
     recordation of any of its interests in the Copyrights with the U.S.
     Copyright Office and in corresponding national and international copyright
     offices. Such Grantor has used proper statutory notice in connection with
     its use of each patent, trademark and copyright in the Intellectual
     Property Collateral.

                                       7



          (iv) To such Grantor's knowledge, (A) none of the Trade Secrets of
     such Grantor has been used, divulged, disclosed or appropriated to the
     detriment of such Grantor for the benefit of any other Person other than
     such Grantor; (B) no employee, independent contractor or agent of such
     Grantor has misappropriated any trade secrets of any other Person in the
     course of the performance of his or her duties as an employee, independent
     contractor or agent of such Grantor; and (C) no employee, independent
     contractor or agent of such Grantor is in default or breach of any term of
     any employment agreement, non-disclosure agreement, assignment of
     inventions agreement or similar agreement or contract relating in any way
     to the protection, ownership, development, use or transfer of such
     Grantor's Intellectual Property Collateral.

          (v) To such Grantor's knowledge, no Grantor or Intellectual Property
     Collateral is subject to any outstanding consent, settlement, decree,
     order, injunction, judgment or ruling restricting the use of any
     Intellectual Property Collateral or that would impair the validity or
     enforceability of such Intellectual Property Collateral.

          Section 12. Further Assurances. (a) Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be reasonably necessary or desirable, or that
the Administrative Agent may reasonably request, in order to perfect and protect
any pledge or security interest granted or purported to be granted by such
Grantor hereunder or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral of such
Grantor. Without limiting the generality of the foregoing, each Grantor will,
upon the Administrative Agent's reasonable request, promptly with respect to
Collateral of such Grantor: i. if any such Collateral shall be evidenced by a
promissory note or other instrument or Chattel Paper, deliver and pledge to the
Administrative Agent hereunder such note or instrument or Chattel Paper duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance reasonably satisfactory to the Administrative Agent;
(ii) execute or authenticate and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
reasonably necessary or desirable, or as the Administrative Agent may reasonably
request, in order to perfect and preserve the security interest granted or
purported to be granted by such Grantor hereunder; (iii) deliver and pledge to
the Administrative Agent for benefit of the Secured Parties certificates
representing Security Collateral that constitutes certificated securities,
accompanied by undated stock or bond powers executed in blank; (iv) during the
continuation of an Event of Default take all action necessary to ensure that the
Administrative Agent has control of Collateral consisting of Deposit Accounts,
Electronic Chattel Paper, Investment Property, Letter of Credit Rights and
transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107 of
the UCC and in Section 16 of UETA; and (v) deliver to the Administrative Agent
evidence that all other action that the Administrative Agent may deem reasonably
necessary or desirable in order to perfect and protect the security interest
created by such Grantor under this Agreement has been taken.

          (b) Each Grantor hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
including, without limitation, one or more financing statements indicating that
such financing statements cover all assets or all personal property (or words of
similar effect) of such Grantor, in each case without

                                       8



the signature of such Grantor, and regardless of whether any particular asset
described in such financing statements falls within the scope of the UCC or the
granting clause of this Agreement. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law. Each
Grantor ratifies its authorization for the Administrative Agent to have filed
such financing statements, continuation statements or amendments filed prior to
the date hereof.

          Section 13. As to Equipment and Inventory. Each Grantor will cause the
Equipment of such Grantor to be maintained and preserved in the same condition,
repair and working order as required under the Credit Agreement. Each Grantor
will promptly furnish to the Administrative Agent a statement respecting any
loss or damage exceeding $1,000,000 to any of the Equipment or Inventory of such
Grantor.

          Section 14. Post-Closing Changes; Bailees; Collections on Assigned
Agreements and Accounts. (a) No Grantor will change its name, type of
organization, jurisdiction of organization, organizational identification number
or location from those set forth in Section 6(a) of this Agreement without first
giving at least 10 days' (or such lesser period of time as the Administrative
Agent may agree) prior written notice to the Administrative Agent and taking all
action required by the Administrative Agent for the purpose of perfecting or
protecting the security interest granted by this Agreement.

          (b) During the continuation of an Event of Default, if any Collateral
of any Grantor is at any time in the possession or control of a warehouseman,
bailee or agent, upon the request of the Administrative Agent such Grantor will
(i) notify such warehouseman, bailee or agent of the security interest created
hereunder, (ii) instruct such warehouseman, bailee or agent to hold all such
Collateral solely for the Administrative Agent's account subject only to the
Administrative Agent's instructions, (iii) use commercially reasonable efforts,
to cause such warehouseman, bailee or agent to authenticate a record
acknowledging that it holds possession of such Collateral for the Administrative
Agent's benefit and shall act solely on the instructions of the Administrative
Agent without the further consent of the Grantor or any other Person, and (iv)
make such authenticated record available to the Administrative Agent.

          (c) Except as otherwise provided in this subsection (c), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Accounts. In connection with such collections, such
Grantor may take (and, at the Administrative Agent's direction during the
continuation of an Event of Default, may take) such commercially reasonable
action as such Grantor (or the Administrative Agent) may deem necessary or
advisable to enforce collection thereof; provided, however, that the
Administrative Agent shall have the right at any time upon the occurrence and
during the continuance of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Accounts, of
the assignment of such Accounts, to the Administrative Agent and to direct such
Obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Administrative Agent and, upon such notification and
at the expense of such Grantor, to enforce collection of any such Accounts, to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done, and to otherwise
exercise all rights with respect to such Accounts, including, without
limitation, those set forth set forth in Section 9-607 of the UCC. After receipt

                                       9



by any Grantor of the notice from the Administrative Agent referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including,
without limitation, instruments) received by such Grantor in respect of the
Accounts, of such Grantor shall be received in trust for the benefit of the
Administrative Agent hereunder, shall be segregated from other funds of such
Grantor and shall be either (A) released to such Grantor to the extent permitted
under the terms of the Credit Agreement so long as no an Event of Default shall
have occurred and be continuing or (B) if any Event of Default shall have
occurred and be continuing, applied as provided in Section 8.03 of the Credit
Agreement and (ii) such Grantor will not adjust, settle or compromise the amount
or payment of any Account, release wholly or partly any Obligor thereof, or
allow any credit or discount thereon. No Grantor will permit or consent to the
subordination of its right to payment under any of the Accounts to any other
indebtedness or obligations of the Obligor thereof.

          Section 15. As to Intellectual Property Collateral. (a) With respect
to each item of its Intellectual Property Collateral, each Grantor agrees to
take, at its expense, all commercially reasonable steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other governmental authority, to (i) maintain the validity and
enforceability of such Intellectual Property Collateral and maintain such
Intellectual Property Collateral in full force and effect, and (ii) pursue the
registration and maintenance of each patent, trademark, or copyright
registration or application, now or hereafter included in such Intellectual
Property Collateral of such Grantor, including, without limitation, the payment
of required fees and taxes, the filing of responses to office actions issued by
the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
governmental authorities, the filing of applications for renewal or extension,
the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings, except to the extent failure to
act could not reasonably be expected to cause a Material Adverse Effect.

          (b) Except as could not be reasonably expected to have a Material
Adverse Effect, no Grantor shall do or permit any act or knowingly omit to do
any act whereby any of its Intellectual Property Collateral may lapse or become
invalid or unenforceable or placed in the public domain.

          (c) Except where failure to do so could not reasonably be expected to
cause a Material Adverse Effect, each Grantor shall take all commercially
reasonable steps which it or the Administrative Agent (during the continuation
of an Event of Default) deems reasonable and appropriate under the circumstances
to preserve and protect each item of its Intellectual Property Collateral,
including, without limitation, maintaining the quality of any and all products
or services used or provided in connection with any of the Trademarks,
consistent with the quality of the products and services as of the date hereof,
and taking all steps necessary to ensure that all licensed users of any of the
Trademarks use such consistent standards of quality.

          (d) With respect to its Intellectual Property Collateral, each Grantor
agrees to execute or otherwise authenticate an agreement, in substantially the
form set forth in Exhibit B hereto or otherwise in form and substance
satisfactory to the Administrative Agent (an "Intellectual Property Security
Agreement"), for recording the security interest granted

                                       10



hereunder to the Administrative Agent in such Intellectual Property Collateral
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such Intellectual Property Collateral.

          (e) Each Grantor agrees that should it obtain an ownership interest in
any item of the type set forth in Section 1(q) that is not on the date hereof a
part of the Intellectual Property Collateral ("After-Acquired Intellectual
Property") (i) the provisions of this Agreement shall automatically apply
thereto, and (ii) any such After-Acquired Intellectual Property and, in the case
of trademarks, the goodwill symbolized thereby, shall automatically become part
of the Intellectual Property Collateral subject to the terms and conditions of
this Agreement with respect thereto. Each Grantor shall give prompt written
notice to the Administrative Agent identifying the After-Acquired Intellectual
Property, and such Grantor shall, concurrently with the delivery of financial
statements under Section 6.01(b) of the Credit Agreement, execute and deliver to
the Administrative Agent, or otherwise authenticate, an agreement substantially
in the form of Exhibit C hereto or otherwise in form and substance satisfactory
to the Administrative Agent (an "IP Security Agreement Supplement") covering
such After-Acquired Intellectual Property which IP Security Agreement Supplement
shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other governmental authorities necessary to perfect the security
interest hereunder in such After-Acquired Intellectual Property.

          Section 16. Voting Rights; Dividends; Etc. (a) So long as no Event of
Default shall have occurred and be continuing:

          (i) Each Grantor shall be entitled to exercise any and all voting and
     other consensual rights pertaining to the Security Collateral of such
     Grantor or any part thereof for any purpose other than originate
     Entitlement Orders with respect to any Securities Account or Commodity
     Account; provided however, that such Grantor will not exercise or refrain
     from exercising any such right if such action would have a material adverse
     effect on the value of the Security Collateral or any part thereof.

          (ii) Each Grantor shall be entitled to receive and retain any and all
     dividends, interest and other distributions paid in respect of the Security
     Collateral of such Grantor if and to the extent that the payment thereof is
     not otherwise prohibited by the terms of the Loan Documents; provided,
     however, that any and all

               (1) dividends, interest and other distributions paid or payable
          other than in cash in respect of, and instruments and other property
          received, receivable or otherwise distributed in respect of, or in
          exchange for, any Security Collateral,

               (2) dividends and other distributions paid or payable in cash in
          respect of any Security Collateral in connection with a partial or
          total liquidation or dissolution or in connection with a reduction of
          capital, capital surplus or paid-in-surplus and

               (3) cash paid, payable or otherwise distributed in respect of
          principal of, or in redemption of, or in exchange for, any Security
          Collateral

                                       11



          shall be, and shall be forthwith delivered to the Administrative Agent
          to hold as, Security Collateral and shall, if received by such
          Grantor, be received in trust for the benefit of the Administrative
          Agent, be segregated from the other property or funds of such Grantor
          and be forthwith delivered to the Administrative Agent as Security
          Collateral in the same form as so received (with any necessary
          indorsement).

               (iii) The Administrative Agent will execute and deliver (or cause
          to be executed and delivered) to each Grantor all such proxies and
          other instruments as such Grantor may reasonably request for the
          purpose of enabling such Grantor to exercise the voting and other
          rights that it is entitled to exercise pursuant to paragraph (i) above
          and to receive the dividends or interest payments that it is
          authorized to receive and retain pursuant to paragraph (ii) above.

               (b) Upon the occurrence and during the continuance of an Event of
Default:

               (i) All rights of each Grantor (x) to exercise or refrain from
          exercising the voting and other consensual rights that it would
          otherwise be entitled to exercise pursuant to Section 11(a)(i) shall,
          upon notice to such Grantor by the Administrative Agent, cease and (y)
          to receive the dividends, interest and other distributions that it
          would otherwise be authorized to receive and retain pursuant to
          Section 11(a)(ii) shall automatically cease, and all such rights shall
          thereupon become vested in the Administrative Agent, which shall
          thereupon have the sole right to exercise or refrain from exercising
          such voting and other consensual rights and to receive and hold as
          Security Collateral such dividends, interest and other distributions.

               (ii) All dividends, interest and other distributions that are
          received by any Grantor contrary to the provisions of paragraph (i) of
          this Section 11(b) shall be received in trust for the benefit of the
          Administrative Agent, shall be segregated from other funds of such
          Grantor and shall be forthwith paid over to the Administrative Agent
          as Security Collateral in the same form as so received (with any
          necessary indorsement).

               (iii) The Administrative Agent shall be authorized to exercise
          exclusive control over all Deposit Accounts, Securities Accounts and
          Commodity Accounts.

          Section 17. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and Liens permitted under the Credit Agreement.

          (b) Each Grantor agrees that it will (i) cause each issuer of the
Pledged Equity pledged by such Grantor not to issue any Equity Interests or
other securities in addition to or in substitution for the Pledged Equity issued
by such issuer, except to such Grantor, and (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
Equity Interests or other securities (subject to Section 1(o)(ii) with respect
to Voting Foreign Stock).

                                       12



          Section 18. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time, upon the occurrence
and during the continuance of an Event of Default, in the Administrative Agent's
discretion, to take any action and to execute any instrument that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation:

          (a) to obtain and adjust insurance required to be paid to the
Administrative Agent,

          (b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,

          (c) to receive, indorse and collect any drafts or other instruments,
documents and Chattel Paper, in connection with clause (a) or (b) above, and

          (d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Assigned Agreement or the rights of the Administrative Agent
with respect to any of the Collateral.

          Section 19. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may, but
without any obligation to do so and without notice, itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by such Grantor under Section
17.

          Section 20. The Administrative Agent's Duties. The powers conferred on
the Administrative Agent hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.

          Section 21. Remedies. If any Event of Default shall have occurred and
be continuing:

          (a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party upon
default under the UCC (whether or not the UCC

                                       13



applies to the affected Collateral) and also may: (i) require each Grantor to,
and each Grantor hereby agrees that it will at its expense and upon request of
the Administrative Agent forthwith, assemble all or part of the Collateral as
directed by the Administrative Agent and make it available to the Administrative
Agent at a place and time to be designated by the Administrative Agent that is
reasonably convenient to both parties; (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Administrative Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable; (iii) occupy any premises
owned or to the extent lawful and permitted leased by any of the Grantors where
the Collateral or any part thereof is assembled or located for a reasonable
period in order to effectuate its rights and remedies hereunder or under law,
without obligation to such Grantor in respect of such occupation; and (iv)
exercise any and all rights and remedies of any of the Grantors under or in
connection with the Collateral, or otherwise in respect of the Collateral,
including, without limitation, (A) any and all rights of such Grantor to demand
or otherwise require payment of any amount under, or performance of any
provision of, the Assigned Agreements, the Accounts and the other Collateral,
(B) withdraw, or cause or direct the withdrawal, of all funds with respect to
the Deposit Accounts and (C) exercise all other rights and remedies with respect
to the Assigned Agreements, the Accounts and the other Collateral, including,
without limitation, those set forth in Section 9-607 of the UCC. Each Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten
(10) days' notice to such Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.

          (b) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Administrative Agent in the same form as so received (with any necessary
indorsement).

          (c) The Administrative Agent may, without notice to any Grantor except
as required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against any funds
held with respect to any Deposit Account.

          (d) If the Administrative Agent shall determine to exercise its right
to sell all or any of the Security Collateral of any Grantor pursuant to this
Section 16, each Grantor agrees that, upon request of the Administrative Agent,
such Grantor will, at its own expense, do or cause to be done all such other
acts and things as may be necessary to make such sale of such Security
Collateral or any part thereof valid and binding and in compliance with
applicable law.

          (e) The Administrative Agent is authorized, in connection with any
sale of the Security Collateral pursuant to this Section 16, to deliver or
otherwise disclose to any prospective purchaser of the Security Collateral: (i)
any registration statement or prospectus, and

                                       14



all supplements and amendments thereto; (ii) any information and projections;
and (iii) any other information in its possession relating to such Security
Collateral.

          (f) Each Grantor acknowledges the impossibility of ascertaining the
amount of damages that would be suffered by the Secured Parties by reason of the
failure by such Grantor to perform any of the covenants contained in subsection
(d) above and, consequently, agrees that, if such Grantor shall fail to perform
any of such covenants, it will pay, as liquidated damages and not as a penalty,
an amount equal to the value of the Security Collateral on the date the
Administrative Agent shall demand compliance with subsection (d) above.

          Section 22. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct or breach
of this Agreement by the Secured Party.

          (b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Administrative Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the other Secured Parties hereunder or (iv) the failure
by such Grantor to perform or observe any of the provisions hereof.

          Section 23. Amendments; Waivers; Additional Grantors; Etc. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Administrative Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Administrative
Agent or any other Secured Party to exercise, and no delay in exercising any
right hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.

          (b) Upon the execution and delivery, or authentication, by any Person
of a security agreement supplement in substantially the form of Exhibit A hereto
(each a "Security Agreement Supplement"), (i) such Person shall be referred to
as an "Additional Grantor" and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to "Grantor" shall also
mean and be a reference to such Additional Grantor, and each reference in this
Agreement and the other Loan Documents to "Collateral" shall also mean and be a
reference to the Collateral of such Additional Grantor, and (ii) the
supplemental

                                       15



schedules I through IV attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I through IV,
respectively, hereto, and the Administrative Agent may attach such supplemental
schedules to such Schedules; and each reference to such Schedules shall mean and
be a reference to such Schedules as supplemented pursuant to each Security
Agreement Supplement.

          Section 24. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication or facsimile transmission) and mailed, telegraphed,
telecopied, telexed, faxed or delivered to it, if to any Grantor, addressed to
it in care of the Borrower at the Borrower's address specified in Section 10.02
of the Credit Agreement, if to the Administrative Agent, at its address
specified in Section 10.02 of the Credit Agreement. All such notices and other
communications shall be deemed to be given or made at such time as shall be set
forth in Section 10.02 of the Credit Agreement. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or of any Security Agreement Supplement or Schedule hereto shall be
effective as delivery of an original executed counterpart thereof.

          Section 25. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Secured Obligations, (ii) the Maturity Date
and (iii) the termination or expiration of all Letters of Credit and all Secured
Hedge Agreements, (b) be binding upon each Grantor, its successors and assigns
and (c) inure, together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Loans owing to it
and the Note or Notes, if any, held by it) to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such Lender herein or otherwise, in each case as provided in Section
10.07 of the Credit Agreement.

          Section 26. Release; Termination. (a) Upon any sale, lease, transfer
or other disposition of any item of Collateral of any Grantor permitted by, and
in accordance with, the terms of the Loan Documents (other than sales of
Inventory in the ordinary course of business), the Administrative Agent will, at
such Grantor's expense, execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted hereby; provided,
however, that such Grantor shall have delivered to the Administrative Agent a
written request for release describing the item of Collateral and the terms of
the sale, lease, transfer or other disposition in reasonable detail, including,
without limitation, the price thereof and any expenses in connection therewith,
together with a form of release for execution by the Administrative Agent and a
certificate of such Grantor to the effect that the transaction is in compliance
with the Loan Documents and as to such other matters as the Administrative Agent
may request.

          (b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the Maturity Date and (iii) the termination or expiration of
all Letters of Credit and all Secured Hedge Agreements, the pledge and security
interest granted hereby shall

                                       16



terminate and all rights to the Collateral shall revert to the applicable
Grantor. Upon any such termination, the Administrative Agent will, at the
applicable Grantor's expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

          Section 27. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

          Section 28. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and real estate leases, letting and
licenses of, and contracts and agreements relating to the lease of, real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.

          Section 29. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

                                       17



          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                            THL FOOD PRODUCTS CO.


                                            By
                                               ---------------------------------
                                               Title: Chief Financial Officer
                                               and Treasurer

                                            Address for Notices:

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

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


                                            THL FOOD PRODUCTS HOLDINGS CO.


                                            By
                                               ---------------------------------
                                               Title: Chief Financial Officer
                                               and Treasurer

                                            Address for Notices:

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

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


                                            MICHAEL FOODS OF DELAWARE, INC.


                                            By
                                               ---------------------------------
                                               Title: Executive Vice President,
                                               Chief Financial Officer and
                                               Treasurer

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer



                                            CASA TRUCKING, INC.


                                            By
                                               ---------------------------------
                                               Title: Chief Financial Officer
                                               and Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            CRYSTAL FARMS REFRIGERATED
                                            DISTRIBUTION COMPANY


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            KMS DAIRY, INC.


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer

                                       19



                                            MINNESOTA PRODUCTS, INC.


                                            By
                                               ---------------------------------
                                               Title: Chief Financial Officer
                                               and Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            NORTHERN STAR CO.


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            PAPETTI'S HYGRADE EGG PRODUCTS, INC.


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            M.G. WALDBAUM COMPANY


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer

                                       20



                                            FARM FRESH FOODS, INC.


                                            By
                                               ---------------------------------
                                               Title: Chief Financial Officer
                                               and Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            PAPETTI ELECTROHEATING CORPORATION


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            WFC, INC.


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer


                                            WISCO FARM COOPERATIVE


                                            By
                                               ---------------------------------
                                               Title: Vice President - Finance

                                            Address for Notices:
                                            c/o Michael Foods, Inc.
                                            301 Carlson Parkway, Suite 400
                                            Minnetonka, Minnesota 55305
                                            Attn: Mark Witmer

                                       21



                                                                       EXHIBIT H

                                FORM OF MORTGAGE

                MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
                     AND LEASES AND FIXTURE FILING ([STATE])

                                   by and from

                            [MORTGAGOR], "Mortgagor"

                                       to

                             BANK OF AMERICA, N.A.,
                      in its capacity as Agent, "Mortgagee"

                        Dated as of               , 2003
                                    --------------

     [insert only if mortgage is capped: THE MAXIMUM PRINCIPAL INDEBTEDNESS
WHICH IS SECURED BY OR WHICH BY ANY CONTINGENCY MAY BE SECURED BY THIS MORTGAGE
                             IS $               .]
                                 ---------------

                              Location:
                              Municipality:
                              County:
                              State:

            THE SECURED PARTY (MORTGAGEE) DESIRES THIS FIXTURE FILING
            TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE
                                DESCRIBED HEREIN

                      PREPARED BY, RECORDING REQUESTED BY,
                           AND WHEN RECORDED MAIL TO:

                             Shearman & Sterling LLP
                              599 Lexington Avenue
                          New York, New York 10022-6069
                       Attention: Malcolm M. Kratzer, Esq.
                                 File #8724-373

                                       22



                MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
                     AND LEASES AND FIXTURE FILING ([STATE])

          THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND
FIXTURE FILING ([STATE]) (this "Mortgage") is dated as of               , 2003
                                                          --------------
by and from [MORTGAGOR], a [                   ] [                   ]
                            -------------------   -------------------
("Mortgagor"), whose address is [                    ] to BANK OF AMERICA, N.A.,
                                 --------------------
a national association, as administrative agent (in such capacity, "Agent") for
the Secured Parties as defined in the Credit Agreement (defined below), having
an address at Independence Center, 15th Floor, NC1-001-15-04, 101 North Tryon
Street, Charlotte, North Carolina 28255 (Agent, together with its successors and
assigns, "Mortgagee").

[insert only if mortgage is capped: ANY PROVISION HEREIN TO THE CONTRARY
NOTWITHSTANDING, THE MAXIMUM PRINCIPAL INDEBTEDNESS WHICH IS SECURED BY OR WHICH
BY ANY CONTINGENCY MAY BE SECURED BY THIS MORTGAGE IS $[           ] (THE
                                                        -----------
"SECURED AMOUNT").]

DEFINITIONS

Definitions. All capitalized terms used herein without definition shall have the
respective meanings ascribed to them in that certain Credit Agreement dated as
of even date herewith, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time (the "Credit Agreement"),
among THL Food Products Co. and M-Foods Holdings, Inc. (collectively,
"Borrower"), THL Food Products Holding Co. and the other Secured Parties
identified therein. As used herein, the following terms shall have the following
meanings:

"Event of Default": An Event of Default under and as defined in the Credit
Agreement.

"Indebtedness": (1) All indebtedness of Mortgagor to Mortgagee or any of the
other Secured Parties under the Credit Agreement or any other Loan Document to
which Mortgagor is a party, including, without limitation (except as otherwise
set forth in Section 1(b) of the Subsidiary Guaranty), the sum of all (a)
principal, interest and other amounts owing under or evidenced or secured by the
Loan Documents, (b) principal, interest and other amounts which may hereafter be
lent by Mortgagee or any of the other Secured Parties under or in connection
with the Credit Agreement or any of the other Loan Documents, whether evidenced
by a promissory note or other instrument which, by its terms, is secured hereby,
and (c) obligations and liabilities of any nature now or hereafter existing
under or arising in connection with Letters of Credit and other extensions of
credit under the Credit Agreement or any of the other Loan Documents and
reimbursement obligations in respect thereof, together with interest and other
amounts payable with respect thereto, and (2) all other indebtedness,
obligations and liabilities now or hereafter existing of any kind of Mortgagor
to Mortgagee or any of the other Secured Parties under documents which recite
that they are intended to be secured by this Mortgage. The Credit Agreement
contains a revolving credit facility which permits Borrower to borrow certain
principal amounts, repay all or a portion of such principal amounts, and
reborrow the amounts previously paid to the Secured Parties, all upon
satisfaction of certain conditions stated in the Credit Agreement. [use only if
mortgage is capped: Subject to the provisions of Section 2.2, this] [This]
Mortgage secures all advances and re-advances under the Credit Agreement,
including, without limitation, those under the revolving credit facility
contained therein.



"Mortgaged Property": The fee interest in the real property described in Exhibit
A attached hereto and incorporated herein by this reference, together with any
greater estate in such real property as hereafter may be acquired by Mortgagor
(the "Land"), and all of Mortgagor's right, title and interest in and to (1) all
improvements now owned or hereafter acquired by Mortgagor, now or at any time
situated, placed or constructed upon the Land (the "Improvements"; the Land and
Improvements are collectively referred to as the "Premises"), (2) all materials,
supplies, equipment, apparatus and other items of personal property now owned or
hereafter acquired by Mortgagor and now or hereafter attached to, installed in
or used in connection with any of the Improvements or the Land, and water, gas,
electrical, telephone, storm and sanitary sewer facilities and all other
utilities whether or not situated in easements (the "Fixtures"), (3) all goods,
accounts, general intangibles, instruments, documents, chattel paper and all
other personal property of any kind or character, including such items of
personal property as defined in the UCC (defined below), now owned or hereafter
acquired by Mortgagor and now or hereafter affixed to, placed upon, used in
connection with, arising from or otherwise related to the Premises (the
"Personalty"), (4) all reserves, escrows or impounds required under the Credit
Agreement or any of the other Loan Documents and all deposit accounts maintained
by Mortgagor with respect to the Mortgaged Property (the "Deposit Accounts"),
(5) all leases, licenses, concessions, occupancy agreements or other agreements
(written or oral, now or at any time in effect) to which Mortgagor is a party
which grant to any Person a possessory interest in, or the right to use, all or
any part of the Mortgaged Property, together with all related security and other
deposits (the "Leases"), (6) all of the rents, revenues, royalties, income,
proceeds, profits, security and other types of deposits, and other benefits paid
or payable by parties to the Leases for using, leasing, licensing possessing,
operating from, residing in, selling or otherwise enjoying the Mortgaged
Property (the "Rents"), (7) all other agreements, such as construction
contracts, architects' agreements, engineers' contracts, utility contracts,
maintenance agreements, management agreements, service contracts, listing
agreements, guaranties, warranties, permits, licenses, certificates and
entitlements in any way relating to the construction, use, occupancy, operation,
maintenance, enjoyment or ownership of the Mortgaged Property (the "Property
Agreements"), (8) all rights, privileges, tenements, hereditaments,
rights-of-way, easements, appendages and appurtenances appertaining to the
foregoing, (9) all property tax refunds payable to Mortgagor with respect to the
Mortgaged Property (the "Tax Refunds"), (10) all accessions, replacements and
substitutions for any of the foregoing and all proceeds thereof (the
"Proceeds"), (11) all insurance policies, unearned premiums therefor and
proceeds from such policies covering any of the above property now or hereafter
acquired by Mortgagor (the "Insurance"), and (12) all awards, damages,
remunerations, reimbursements, settlements or compensation heretofore made or
hereafter to be made by any governmental authority pertaining to any
condemnation or other taking (or any purchase in lieu thereof) of all or any
portion of the Land, Improvements, Fixtures or Personalty (the "Condemnation
Awards"). As used in this Mortgage, the term "Mortgaged Property" shall mean all
or, where the context permits or requires, any portion of the above or any
interest therein.

"Obligations": All of the agreements, covenants, conditions, warranties,
representations and other obligations of Mortgagor under the Credit Agreement
and the other Loan Documents to which it is a party.

"Permitted Liens": Liens described in Sections 7.01 of the Credit Agreement.

                                       24



"UCC": The Uniform Commercial Code of [STATE] or, if the creation, perfection
and enforcement of any security interest herein granted is governed by the laws
of a state other than [STATE], then, as to the matter in question, the Uniform
Commercial Code in effect in that state.

GRANT [INSERT ONLY IF MORTGAGE IS CAPPED: ; REVOLVING LOAN]

Grant. To secure the full and timely payment of the Indebtedness and the full
and timely performance of the Obligations, Mortgagor MORTGAGES, GRANTS,
BARGAINS, ASSIGNS, SELLS, CONVEYS and CONFIRMS, to Mortgagee the Mortgaged
Property, subject, however, only to the matters that are set forth on Exhibit B
attached hereto (the "Permitted Encumbrances") and to Permitted Liens, TO HAVE
AND TO HOLD the Mortgaged Property to Mortgagee, and Mortgagor does hereby bind
itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to
the Mortgaged Property unto Mortgagee.

Treatment of Borrowings and Repayments. [insert only if mortgage is capped:
Pursuant to the Credit Agreement, the amount of the Indebtedness may increase
and decrease from time to time as the Secured Parties advance, Borrower repays,
and the Secured Parties re-advance sums pursuant to the Credit Agreement. For
purposes of this Mortgage, so long as the balance of the Indebtedness equals or
exceeds the Secured Amount, the amount of the Indebtedness secured by this
Mortgage shall at all times equal only the Secured Amount. Such Secured Amount
represents only a portion of the first sums advanced by the Secured Parties in
respect of the Indebtedness.

Reduction of Secured Amount. [insert only if mortgage is capped: The Secured
Amount shall be reduced only by the last and final sums that Borrower repays
with respect to the Indebtedness and shall not be reduced by any intervening
repayments of the Indebtedness. So long as the balance of the Indebtedness
exceeds the Secured Amount, any payments and repayments of the Indebtedness
shall not be deemed to be applied against, or to reduce, the portion of the
Indebtedness secured by this Mortgage. Such payments shall instead be deemed to
reduce only such portions of the Indebtedness as are secured by other collateral
located outside of the State of [STATE].

WARRANTIES, REPRESENTATIONS AND COVENANTS

          Mortgagor warrants, represents and covenants to Mortgagee as follows:

Title to Mortgaged Property and Lien of this Instrument. Mortgagor owns the
Mortgaged Property free and clear of any liens, claims or interests, except the
Permitted Encumbrances and Permitted Liens. This Mortgage creates valid,
enforceable first priority liens and security interests against the Mortgaged
Property, except for Permitted Encumbrances and Permitted Liens.

First Lien Status. Mortgagor shall preserve and protect the first lien and
security interest status of this Mortgage. If any lien or security interest
other than a Permitted Encumbrance or a Permitted Lien is asserted against the
Mortgaged Property, Mortgagor shall promptly, and at its expense, (a) give
Mortgagee a detailed written notice of such lien or security interest (including
origin, amount and other terms), and (b) pay the underlying claim in full or
take such other action so as to cause it to be released or contest the same as
required by and in compliance with

                                       25



the Credit Agreement (including, if applicable under the Credit Agreement, the
requirement of providing a bond or other security satisfactory to Mortgagee).

Payment and Performance. Mortgagor covenants and agrees that, so long as any
part of the Obligations shall remain unpaid, any Letter of Credit shall be
outstanding, any Secured Party shall have any Commitment or any Secured Hedge
Agreement shall be in effect, Mortgagor shall perform and observe all of the
terms, covenants and agreements set forth in the Loan Documents on its part to
be performed or observed (including without limitation the Subsidiary Guaranty)
or that Borrower has agreed to cause Mortgagor to perform or observe.

Replacement of Fixtures and Personalty. Mortgagor shall not, without the prior
written consent of Mortgagee, permit any of the Fixtures or Personalty owned or
leased by Mortgagor to be removed at any time from the Land or Improvements,
unless the removed item is removed temporarily for maintenance and repair or is
permitted to be removed by the Credit Agreement.

Inspection. Mortgagor shall permit Mortgagee, and the other Secured Parties, and
their respective agents, representatives and employees, upon reasonable prior
notice to Mortgagor, to inspect the Mortgaged Property and all books and records
of Mortgagor located thereon, and to conduct such environmental and engineering
studies as Mortgagee or the other Secured Parties may require, provided that
such inspections and studies shall not materially interfere with the use and
operation of the Mortgaged Property.

Insurance; Condemnation Awards and Insurance Proceeds.

Insurance. Mortgagor shall maintain or cause to be maintained with financially
sound and reputable insurance companies, insurance with respect to the Mortgaged
Property against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Mortgagor) as are customarily carried under similar circumstances by such
Persons. Subject to Mortgagor's right to self-insure set forth in the foregoing
sentence, each such policy of insurance shall name Mortgagee as the loss payee
(or, in the case of liability insurance, an additional insured) thereunder for
the ratable benefit of the Secured Parties, and shall provide for at least 30
days' prior written notice of any material modification or cancellation of such
policy. In addition to the foregoing, if any portion of the Mortgaged Property
is located in an area identified by the Federal Emergency Management Agency as
an area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (or any amendment or
successor act thereto), then Mortgagor shall maintain, or cause to be
maintained, with a financially sound and reputable insurer, flood insurance in
an amount sufficient to comply with all applicable rules and regulations
promulgated pursuant to such Act.

Condemnation Awards. All Condemnation Awards awarded to Mortgagor shall be
reinvested and/or applied in accordance with the terms of the Credit Agreement,
including without limitation Section 2.05(b) thereof.

                                       26



Insurance Proceeds. All proceeds of any insurance policies required under the
Loan Documents relating to the Mortgaged Property shall be reinvested and/or
applied in accordance with the terms of the Credit Agreement, including without
limitation Section 2.05(b) thereof.

[INTENTIONALLY OMITTED]

DEFAULT AND FORECLOSURE

Remedies. Upon the occurrence and during the continuance of an Event of Default,
Mortgagee may, at Mortgagee's election, exercise any or all of the following
rights, remedies and recourses:

Acceleration. Subject to any provisions of the Loan Documents providing for the
automatic acceleration of the Indebtedness upon the occurrence of certain Events
of Default, declare the Indebtedness to be immediately due and payable, without
further notice, presentment, protest, notice of intent to accelerate, notice of
acceleration, demand or action of any nature whatsoever (each of which hereby is
expressly waived by Mortgagor), whereupon the same shall become immediately due
and payable.

Entry on Mortgaged Property. Enter the Mortgaged Property and take exclusive
possession thereof and of all books, records and accounts relating thereto or
located thereon. If Mortgagor remains in possession of the Mortgaged Property
following the occurrence and during the continuance of an Event of Default, and
without Mortgagee's prior written consent, Mortgagee may invoke any legal
remedies to dispossess Mortgagor.

Operation of Mortgaged Property. Hold, lease, develop, manage, operate or
otherwise use the Mortgaged Property upon such terms and conditions as Mortgagee
may deem reasonable under the circumstances (making such repairs, alterations,
additions and improvements and taking other actions, from time to time, as
Mortgagee deems necessary or desirable), and apply all Rents and other amounts
collected by Mortgagee in connection therewith in accordance with the provisions
of Section 5.7.

Foreclosure and Sale. Institute proceedings for the complete foreclosure of this
Mortgage by judicial action or by power of sale, in which case the Mortgaged
Property may be sold for cash or credit in one or more parcels. With respect to
any notices required or permitted under the UCC, Mortgagor agrees that ten (10)
days' prior written notice shall be deemed commercially reasonable. At any such
sale by virtue of any judicial proceedings, power of sale, or any other legal
right, remedy or recourse, the title to and right of possession of any such
property shall pass to the purchaser thereof, and to the fullest extent
permitted by law, Mortgagor shall be completely and irrevocably divested of all
of its right, title, interest, claim, equity, equity of redemption, and demand
whatsoever, either at law or in equity, in and to the property sold and such
sale shall be a perpetual bar both at law and in equity against Mortgagor, and
against all other Persons claiming or to claim the property sold or any part
thereof, by, through or under Mortgagor. Mortgagee or any of the Secured Parties
may be a purchaser at such sale. If Mortgagee or such other Secured Party is the
highest bidder, Mortgagee or such other Secured Party may credit the portion of
the purchase price that would be distributed to Mortgagee or such other Secured
Party against the Indebtedness in lieu of paying cash. In the event this
Mortgage is foreclosed by judicial action, appraisement of the Mortgaged
Property is waived.

                                       27



Receiver. Make application to a court of competent jurisdiction for, and obtain
from such court as a matter of strict right and without notice to Mortgagor or
regard to the adequacy of the Mortgaged Property for the repayment of the
Indebtedness, the appointment of a receiver of the Mortgaged Property, and
Mortgagor irrevocably consents to such appointment. Any such receiver shall have
all the usual powers and duties of receivers in similar cases, including the
full power to rent, maintain and otherwise operate the Mortgaged Property upon
such terms as may be approved by the court, and shall apply such Rents in
accordance with the provisions of Section 5.7.

Other. Exercise, with respect to the Mortgaged Property only, all other rights,
remedies and recourses granted under the Loan Documents or otherwise available
at law or in equity.

Separate Sales. The Mortgaged Property may be sold in one or more parcels and in
such manner and order as Mortgagee in its sole discretion may elect. The right
of sale arising out of any Event of Default shall not be exhausted by any one or
more sales.

Remedies Cumulative, Concurrent and Nonexclusive. Mortgagee shall have all
rights, remedies and recourses granted in the Loan Documents and available at
law or equity (including the UCC), which rights (a) shall be cumulative and
concurrent, (b) may be pursued separately, successively or concurrently against
Mortgagor or others obligated under the Loan Documents, or against the Mortgaged
Property, or against any one or more of them, at the sole discretion of
Mortgagee, (c) may be exercised as often as occasion therefor shall arise, and
the exercise or failure to exercise any of them shall not be construed as a
waiver or release thereof or of any other right, remedy or recourse, and (d) are
intended to be, and shall be, nonexclusive. No action by Mortgagee in the
enforcement of any rights, remedies or recourses under the Loan Documents or
otherwise at law or equity shall be deemed to cure any Event of Default.

Release of and Resort to Collateral. Mortgagee may release, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Mortgaged Property, any part of the
Mortgaged Property without, as to the remainder, in any way impairing,
affecting, subordinating or releasing the lien or security interest created in
or evidenced by the Loan Documents or their status as a first and prior lien and
security interest in and to the Mortgaged Property. For payment of the
Indebtedness, Mortgagee may resort to any other security in such order and
manner as Mortgagee may elect.

Waiver of Redemption, Notice and Marshalling of Assets. To the fullest extent
permitted by law, Mortgagor hereby irrevocably and unconditionally waives and
releases (a) to the extent not inconsistent with the terms of the Credit
Agreement and the Subsidiary Guaranty, all benefit that might accrue to
Mortgagor by virtue of any present or future statute of limitations or law or
judicial decision exempting the Mortgaged Property from attachment, levy or sale
on execution or providing for any stay of execution, exemption from civil
process, redemption or extension of time for payment, (b) all notices of any
Event of Default other than any notices specifically required to be given under
any Loan Document, (c) all notices of Mortgagee's election to exercise or the
actual exercise of any right, remedy or recourse provided for under any Loan
Document, other than any notices specifically required to be given under any
Loan Document, and (d) any right to a marshalling of assets or a sale in inverse
order of alienation.

                                       28



Discontinuance of Proceedings. If Mortgagee or any other Secured Party shall
have proceeded to invoke any right, remedy or recourse permitted under the Loan
Documents and shall thereafter elect to discontinue or abandon it for any
reason, Mortgagee or such other Secured Party, as the case may be, shall have
the unqualified right to do so and, in such an event, Mortgagor, Mortgagee and
the other Secured Parties shall be restored to their former positions with
respect to the Indebtedness, the Obligations, the Loan Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and powers of
Mortgagee and the other Secured Parties shall continue as if the right, remedy
or recourse had never been invoked, but no such discontinuance or abandonment
shall waive any Event of Default which may then exist or the right of Mortgagee
or any other Secured Party thereafter to exercise any right, remedy or recourse
under the Loan Documents for such Event of Default.

Application of Proceeds. The proceeds of any sale of, and the Rents and other
amounts generated by the holding, leasing, management, operation or other use of
the Mortgaged Property, shall be applied by Mortgagee (or the receiver, if one
is appointed) in the following order unless otherwise required by applicable
law:

first, to the payment of the costs and expenses of taking possession of the
Mortgaged Property and of holding, using, leasing, repairing, improving and
selling the same, including, without limitation (1) receiver's fees and
expenses, including the repayment of the amounts evidenced by any receiver's
certificates, (2) court costs, (3) attorneys' and accountants' fees and
expenses, and (4) costs of advertisement;

second, to the payment of the Indebtedness and performance of the Obligations in
the manner and order of preference provided under Section 8.03 of the Credit
Agreement, and

thereafter, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as other required under applicable
law.

Occupancy After Foreclosure. Any sale of the Mortgaged Property or any part
thereof in accordance with Section 5.1(d) will divest all right, title and
interest of Mortgagor in and to the property sold. Subject to applicable law,
any purchaser at a foreclosure sale will receive immediate possession of the
property purchased. If Mortgagor retains possession of such property or any part
thereof subsequent to such sale, Mortgagor will be considered a tenant at
sufferance of the purchaser, and will, if Mortgagor remains in possession after
demand to remove, be subject to eviction and removal, forcible or otherwise,
with or without process of law.

Additional Advances and Disbursements; Costs of Enforcement.

Upon the occurrence and during the continuance of any Event of Default,
Mortgagee and each of the other Secured Parties shall have the right, but not
the obligation, to cure such Event of Default in the name and on behalf of
Mortgagor. All sums advanced and expenses incurred at any time by Mortgagee or
any other Secured Party under this Section 5.9, or otherwise under this Mortgage
or any of the other Loan Documents or applicable law, shall, subject to any
limitations thereon contained in any Loan Document, be payable on demand and
shall bear interest from and including the date that such sum is advanced or
expense incurred, to and excluding the date of

                                       29



reimbursement, at the interest rate applicable to Base Rate Loans pursuant to
Section 2.08(a) of the Credit Agreement (provided that following the occurrence
and during the continuance of any Event of Default set forth in Section 8.01(a)
or (f) of the Credit Agreement, interest shall accrue on such sums at the
Default Rate applicable to Base Rate Loans pursuant to Section 2.08(b) of the
Credit Agreement), and all such sums, together with interest thereon, shall be
secured by this Mortgage.

Mortgagor shall pay all expenses (including reasonable attorneys' fees and
expenses) of or incidental to the perfection and enforcement of this Mortgage,
or the enforcement, compromise or settlement of the Indebtedness or any claim
under this Mortgage, and for the curing thereof, or for defending or asserting
the rights and claims of Mortgagee in respect thereof, by litigation or
otherwise.

No Mortgagee in Possession. Neither the enforcement of any of the remedies under
this Article 5, the assignment of the Rents and Leases under Article 6, the
security interests under Article 7, nor any other remedies afforded to Mortgagee
under the Loan Documents, at law or in equity shall cause Mortgagee or any other
Secured Party to be deemed or construed to be a mortgagee in possession of the
Mortgaged Property, to obligate Mortgagee or any other Secured Party to lease
the Mortgaged Property or attempt to do so, or to take any action, incur any
expense, or perform or discharge any obligation, duty or liability whatsoever
under any of the Leases or otherwise.

ASSIGNMENT OF RENTS AND LEASES

Assignment. In furtherance of and in addition to the assignment made by
Mortgagor in Section 2.1 of this Mortgage, Mortgagor hereby absolutely and
unconditionally assigns, sells, transfers and conveys to Mortgagee all of its
right, title and interest in and to all Leases, whether now existing or
hereafter entered into, and all of its right, title and interest in and to all
Rents. This assignment is an absolute assignment and not an assignment for
additional security only. So long as no Event of Default shall have occurred and
be continuing, Mortgagor shall have a revocable license from Mortgagee to
exercise all rights extended to the landlord under the Leases, including the
right to receive and collect all Rents and to hold the Rents in trust for use in
the payment and performance of the Obligations and to otherwise use the same.
The foregoing license is granted subject to the conditional limitation that no
Event of Default shall have occurred and be continuing. Upon the occurrence and
during the continuance of an Event of Default, whether or not legal proceedings
have commenced, and without regard to waste, adequacy of security for the
Obligations or solvency of Mortgagor, the license herein granted shall
automatically expire and terminate, without notice to Mortgagor by Mortgagee
(any such notice being hereby expressly waived by Mortgagor to the extent
permitted by applicable law).

Perfection Upon Recordation. Mortgagor acknowledges that Mortgagee has taken all
actions necessary to obtain, and that upon recordation of this Mortgage
Mortgagee shall have, to the extent permitted under applicable law, a valid and
fully perfected, first priority, present assignment of the Rents arising out of
the Leases and all security for such Leases. Mortgagor acknowledges and agrees
that upon recordation of this Mortgage Mortgagee's interest in the Rents shall
be deemed to be present and fully perfected, "choate" and enforced as to
Mortgagor and to the extent permitted under applicable law, all third parties,
including, without limitation,

                                       30



any subsequently appointed trustee in any case under Title 11 of the United
States Code (the "Bankruptcy Code"), without the necessity of commencing a
foreclosure action with respect to this Mortgage, making formal demand for the
Rents, obtaining the appointment of a receiver or taking any other affirmative
action.

Bankruptcy Provisions. Without limitation of the absolute nature of the
assignment of the Rents hereunder, Mortgagor and Mortgagee agree that (a) this
Mortgage shall constitute a "security agreement" for purposes of Section 552(b)
of the Bankruptcy Code, (b) the security interest created by this Mortgage
extends to property of Mortgagor that comprises the Mortgaged Property and was
acquired before the commencement of a case in bankruptcy and to all amounts paid
as Rents and (c) such security interest shall extend to all Rents acquired by
the estate after the commencement of any case in bankruptcy.

No Merger of Estates. So long as part of the Indebtedness and the Obligations
secured hereby remain unpaid and undischarged, the fee and leasehold estates to
the Mortgaged Property shall not merge, but shall remain separate and distinct,
notwithstanding the union of such estates either in Mortgagor, Mortgagee, any
tenant or any third party by purchase or otherwise.

SECURITY AGREEMENT

Security Interest. This Mortgage constitutes a "security agreement" on personal
property within the meaning of the UCC and other applicable law and with respect
to the Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property
Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards. To this
end, Mortgagor grants to Mortgagee a first and prior security interest in the
Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax
Refunds, Proceeds, Insurance, Condemnation Awards and all other Mortgaged
Property which is personal property to secure the payment of the Indebtedness
and performance of the Obligations, and agrees that Mortgagee shall have all the
rights and remedies of a secured party under the UCC with respect to such
property. Any notice of sale, disposition or other intended action by Mortgagee
with respect to the Personalty, Fixtures, Leases, Rents, Deposit Accounts,
Property Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards
sent to Mortgagor at least ten (10) days prior to any action under the UCC shall
constitute reasonable notice to Mortgagor. In the event of any inconsistency
between the terms of this Mortgage and the terms of the Security Agreement with
respect to the collateral covered both therein and herein, the Security
Agreement shall control and govern to the extent of any such inconsistency.

Financing Statements. Mortgagor shall prepare and deliver to Mortgagee such
financing statements, and shall execute and deliver to Mortgagee such documents,
instruments and further assurances, in each case in form and substance
satisfactory to Mortgagee, as Mortgagee may, from time to time, reasonably
consider necessary to create, perfect and preserve Mortgagee's security interest
hereunder. Mortgagor hereby irrevocably authorizes Mortgagee to cause financing
statements (and amendments thereto and continuations thereof) and any such
documents, instruments and assurances to be recorded and filed, at such times
and places as may be required or permitted by law to so create, perfect and
preserve Mortgagee's security interest in the Mortgaged Property hereunder.
Mortgagor represents and warrants to Mortgagee that Mortgagor's jurisdiction of
organization is the State of [STATE]. After the date of this

                                       31



Mortgage, Mortgagor shall not change its name, type of organization,
organizational identification number (if any), jurisdiction of organization or
location (within the meaning of the UCC) without complying in full with the
terms of the Loan Documents with respect to any such changes.

Fixture Filing. This Mortgage shall also constitute a "fixture filing" for the
purposes of the UCC against all of the Mortgaged Property which is or is to
become fixtures. The information provided in this Section 7.3 is provided so
that this Mortgage shall comply with the requirements of the UCC for a mortgage
instrument to be filed as a financing statement. Mortgagor is the "Debtor" and
its name and mailing address are set forth in the preamble of this Mortgage
immediately preceding Article 1. Mortgagee is the "Secured Party" and its name
and mailing address from which information concerning the security interest
granted herein may be obtained are also set forth in the preamble of this
Mortgage immediately preceding Article 1. A statement describing the portion of
the Mortgaged Property comprising the fixtures hereby secured is set forth in
Section 1.1(c) of this Mortgage. Mortgagor represents and warrants to Mortgagee
that Mortgagor is the record owner of the Mortgaged Property, the employer
identification number of Mortgagor is [          ] and the organizational
                                       ----------
identification number of Mortgagor is [           ].
                                       -----------

[INTENTIONALLY OMITTED]

MISCELLANEOUS

Notices. Any notice required or permitted to be given under this Mortgage shall
be given in accordance with Section 10.02 of the Credit Agreement.

Covenants Running with the Land. All Obligations contained in this Mortgage are
intended by Mortgagor and Mortgagee to be, and shall be construed as, covenants
running with the Mortgaged Property. As used herein, "Mortgagor" shall refer to
the party named in the first paragraph of this Mortgage and to any subsequent
owner of all or any portion of the Mortgaged Property. All Persons who may have
or acquire an interest in the Mortgaged Property shall be deemed to have notice
of, and be bound by, the terms of the Credit Agreement and the other Loan
Documents; provided, however, that no such party shall be entitled to any rights
thereunder without the prior written consent of Mortgagee.

Attorney-in-Fact. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, which agency is coupled with an interest and with full power
of substitution, with full authority in the place and stead of Mortgagor and in
the name of Mortgagor or otherwise (a) to execute and/or record any notices of
completion, cessation of labor or any other notices that Mortgagee deems
necessary and appropriate to protect Mortgagee's interest, if Mortgagor shall
fail to do so promptly after written request by Mortgagee, (b) upon the issuance
of a deed pursuant to the foreclosure of this Mortgage or the delivery of a deed
in lieu of foreclosure, to execute all instruments of assignment, conveyance or
further assurance with respect to the Leases, Rents, Deposit Accounts, Property
Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards in favor of
the grantee of any such deed and as may be necessary or desirable for such
purpose, (c) to prepare and file or record financing statements and continuation
statements, and to prepare, execute and file or record applications for
registration and like papers necessary to

                                       32



create, perfect or preserve Mortgagee's security interests and rights in or to
any of the Mortgaged Property, and (d) after the occurrence and during the
continuance of any Event of Default, to perform any obligation of Mortgagor
hereunder; provided, however, that (1) Mortgagee shall not under any
circumstances be obligated to perform any obligation of Mortgagor; (2) any sums
advanced by Mortgagee in such performance shall be added to and included in the
Indebtedness and shall bear interest at the highest rate at which interest is
then computed on any portion of the Indebtedness; (3) Mortgagee as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Mortgagee; and (4) Mortgagee shall not be liable to Mortgagor or any
other person or entity for any failure to take any action which it is empowered
to take under this Section 9.3.

Successors and Assigns. This Mortgage shall be binding upon and inure to the
benefit of Mortgagee, the other Secured Parties and Mortgagor and their
respective successors and assigns. Mortgagor shall not, without the prior
written consent of Mortgagee, assign any rights, duties or obligations
hereunder.

No Waiver. Any failure by Mortgagee or the other Secured Parties to insist upon
strict performance of any of the terms, provisions or conditions of this
Mortgage shall not be deemed to be a waiver of same, and Mortgagee and the other
Secured Parties shall have the right at any time to insist upon strict
performance of all of such terms, provisions and conditions.

Credit Agreement. If any conflict or inconsistency exists between this Mortgage
and the Credit Agreement, the Credit Agreement shall govern.

Release or Reconveyance. Upon payment in full of the Indebtedness and
performance in full of the Obligations or upon a sale or other disposition of
the Mortgaged Property permitted by the Credit Agreement, Mortgagee, at
Mortgagor's request and expense, shall promptly release the liens and security
interests created by this Mortgage or reconvey the Mortgaged Property to
Mortgagor.

Waiver of Stay, Moratorium and Similar Rights. Mortgagor agrees, to the full
extent that it may lawfully do so, that it will not at any time insist upon or
plead or in any way take advantage of any stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent or hinder the enforcement (consistent with the terms of the Credit
Agreement) of the provisions of this Mortgage or the Indebtedness or Obligations
secured hereby, or any rights or remedies provided hereunder in favor of
Mortgagee or any other Secured Party.

Applicable Law. The provisions of this Mortgage regarding the creation,
perfection and enforcement of the liens and security interests herein granted
shall be governed by and construed under the laws of the state in which the
Mortgaged Property is located. All other provisions of this Mortgage shall be
governed by the laws of the State of New York (including, without limitation,
Section 5-1401 of the General Obligations Law of the State of New York).

Headings. The Article, Section and Subsection titles hereof are inserted for
convenience of reference only and shall in no way alter, modify or define, or be
used in construing, the text of such Articles, Sections or Subsections.

                                       33



Severability. If any provision of this Mortgage shall be held by any court of
competent jurisdiction to be unlawful, void or unenforceable for any reason,
such provision shall be deemed severable from and shall in no way affect the
enforceability and validity of the remaining provisions of this Mortgage.

Entire Agreement. This Mortgage and the other Loan Documents embody the entire
agreement and understanding between Mortgagee and Mortgagor relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Loan Documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There are
no unwritten oral agreements between the parties.

Mortgagee as Agent; Successor Agents.

Agent has been appointed to act as Agent hereunder by the other Secured Parties.
Agent shall have the right hereunder to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
the Mortgaged Property) in accordance with the terms of the Credit Agreement,
any related agency agreement among Agent and the other Secured Parties
(collectively, as amended, amended and restated, supplemented or otherwise
modified or replaced from time to time, the "Agency Documents") and this
Mortgage. Mortgagor and all other Persons shall be entitled to rely on releases,
waivers, consents, approvals, notifications and other acts of Agent, without
inquiry into the existence of required consents or approvals of the Secured
Parties therefor.

Mortgagee shall at all times be the same Person that is Agent under the Agency
Documents. Written notice of resignation by Agent pursuant to the Agency
Documents shall also constitute notice of resignation as Agent under this
Mortgage. Removal of Agent pursuant to any provision of the Agency Documents
shall also constitute removal as Agent under this Mortgage. Appointment of a
successor Agent pursuant to the Agency Documents shall also constitute
appointment of a successor Agent under this Mortgage. Upon the acceptance of any
appointment as Agent by a successor Agent under the Agency Documents, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent as the
Mortgagee under this Mortgage, and the retiring or removed Agent shall promptly
(i) assign and transfer to such successor Agent all of its right, title and
interest in and to this Mortgage and the Mortgaged Property, and (ii) execute
and deliver to such successor Agent such assignments and amendments and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Agent of the liens and security interests created
hereunder, whereupon such retiring or removed Agent shall be discharged from its
duties and obligations under this Mortgage. After any retiring or removed
Agent's resignation or removal hereunder as Agent, the provisions of this
Mortgage and the Agency Documents shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Mortgage while it was Agent
hereunder.

LOCAL LAW PROVISIONS

                                       34



                                    [To Come]

         [The remainder of this page has been intentionally left blank]

                                       35



 IN WITNESS WHEREOF, Mortgagor has on the date set forth in the acknowledgement
hereto, effective as of the date first above written, caused this instrument to
            be duly EXECUTED AND DELIVERED by authority duly given.

                  MORTGAGOR:                [MORTGAGOR], a [        ]
                                                            --------
                                            [              ]
                                             --------------


                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

[STATE-APPROPRIATE NOTARY BLOCK]



                                    EXHIBIT A

Legal Description of premises located at [ADDRESS OF PROPERTY]:



                                    EXHIBIT B

                             PERMITTED ENCUMBRANCES

Those exceptions set forth in Schedule B of that certain policy of title
insurance issued to Mortgagee by Chicago Title Insurance Company on or about the
date hereof pursuant to commitment number [                ].
                                           ----------------



                                                                       EXHIBIT I

                FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

          This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "IP Security
Agreement") dated November 20, 2003, is made by the Persons listed on the
signature pages hereof (collectively, the "Grantors") in favor of Bank of
America, N.A., as administrative agent (the "Administrative Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).

          WHEREAS, THL Food Products Co., a Delaware corporation, has entered
into a Credit Agreement dated as of November 20, 2003 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), with THL Food Products Holding Co., a Delaware corporation
("Holdings"), Bank of America, N.A., as the L/C Issuer, the Swing Line Lender
and the Administrative Agent, the other Agents named therein and the Lenders
party thereto. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as defined in the Credit Agreement.

          WHEREAS, as a condition precedent to the making of the Loans and the
issuance of Letters of Credit by the Lenders under the Credit Agreement and the
entry into Secured Hedge Agreements by the Hedge Banks from time to time, each
Grantor has executed and delivered that certain Security Agreement dated
November 20, 2003 made by the Grantors to the Administrative Agent (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement").

          WHEREAS, under the terms of the Security Agreement, the Grantors have
granted to the Administrative Agent, for the ratable benefit of the Secured
Parties, a security interest in, among other property, certain intellectual
property of the Grantors, and have agreed as a condition thereof to execute this
IP Security Agreement for recording with the U.S. Patent and Trademark Office,
the United States Copyright Office and any other appropriate governmental
authorities.

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

          Section 29. Grant of Security. Each Grantor hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties a security
interest in all of such Grantor's right, title and interest in and to the
following (the "Collateral"):

               (a) the patents and patent applications set forth in Schedule A
          hereto (the "Patents");

               (b) the trademark and service mark registrations and applications
          set forth in Schedule B hereto (provided that no security interest
          shall be granted in United States intent-to-use trademark applications
          to the extent that, and solely during the period in which, the grant
          of a security interest therein would impair the validity or
          enforceability of such intent-to-use trademark applications under

                                       2



          applicable federal law), together with the goodwill symbolized thereby
          (the "Trademarks");

               (c) all copyrights, whether registered or unregistered, now owned
          or hereafter acquired by such Grantor, including, without limitation,
          the copyright registrations and applications and exclusive copyright
          licenses set forth in Schedule C hereto (the "Copyrights");

               (d) all reissues, divisions, continuations,
          continuations-in-part, extensions, renewals and reexaminations of any
          of the foregoing, all rights in the foregoing provided by
          international treaties or conventions, all rights corresponding
          thereto throughout the world and all other rights of any kind
          whatsoever of such Grantor accruing thereunder or pertaining thereto;

               (e) any and all claims for damages and injunctive relief for
          past, present and future infringement, dilution, misappropriation,
          violation, misuse or breach with respect to any of the foregoing, with
          the right, but not the obligation, to sue for and collect, or
          otherwise recover, such damages; and

               (f) any and all proceeds of, collateral for, income, royalties
          and other payments now or hereafter due and payable with respect to,
          and supporting obligations relating to, any and all of the Collateral
          of or arising from any of the foregoing.

          Section 30. Security for Obligations. The grant of a security interest
in, the Collateral by each Grantor under this IP Security Agreement secures the
payment of all Obligations of such Grantor now or hereafter existing under or in
respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.

          Section 31. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer record this IP Security
Agreement.

          Section 32. Execution in Counterparts. This IP Security Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.

          Section 33. Grants, Rights and Remedies. This IP Security Agreement
has been entered into in conjunction with the provisions of the Security
Agreement. Each Grantor does hereby acknowledge and confirm that the grant of
the security interest hereunder to, and the rights and remedies of, the
Administrative Agent with respect to the Collateral are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated
herein by reference as if fully set forth herein.

                                       3



          Section 34. Governing Law. This IP Security Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

          IN WITNESS WHEREOF, each Grantor has caused this IP Security Agreement
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                               THL FOOD PRODUCTS CO.


                               By
                                  ----------------------------------------------
                                    Title: Chief Financial Officer and Treasurer

                               Address for Notices:

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

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


                               THL FOOD PRODUCTS HOLDINGS CO.


                               By
                                  ----------------------------------------------
                                    Title: Chief Financial Officer and Treasurer

                               Address for Notices:

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

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



                               MICHAEL FOODS OF DELAWARE, INC.

                               By
                                  ----------------------------------------------
                                    Title: Executive Vice President, Chief
                                           Financial Officer and Treasurer

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               CASA TRUCKING, INC.


                               By
                                  ----------------------------------------------
                                    Title: Chief Financial Officer and Vice
                                           President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               CRYSTAL FARMS REFRIGERATED
                               DISTRIBUTION COMPANY


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer

                                       5



                               KMS DAIRY, INC.


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               MINNESOTA PRODUCTS, INC.


                               By
                                  ----------------------------------------------
                                    Title: Chief Financial Officer and Vice
                                           President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               NORTHERN STAR CO.


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer

                                       6



                               PAPETTI'S HYGRADE EGG PRODUCTS, INC.


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               M.G. WALDBAUM COMPANY


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               FARM FRESH FOODS, INC.


                               By
                                  ----------------------------------------------
                                    Title: Chief Financial Officer and Vice
                                           President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer

                                       7



                               PAPETTI ELECTROHEATING CORPORATION


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               WFC, INC.


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer


                               WISCO FARM COOPERATIVE


                               By
                                  ----------------------------------------------
                                    Title: Vice President - Finance

                               Address for Notices:
                               c/o Michael Foods, Inc.
                               301 Carlson Parkway, Suite 400
                               Minnetonka, Minnesota 55305
                               Attn: Mark Witmer

                                       8



                                                                       EXHIBIT K

                          FORM OF ASSUMPTION AGREEMENT

          ASSUMPTION AGREEMENT, dated as of November 20, 2003, made by Michael
Foods, Inc., a Delaware corporation (formerly known as M-Foods Holdings, Inc.,
"Michael Foods"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (in
such capacity, the "Administrative Agent") for the banks and other financial
institutions or entities (the "Lenders") parties to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the
meanings given to them in such Credit Agreement.

                              W I T N E S S E T H:

          WHEREAS, THL Food Products Co., a Delaware corporation (the
"Company"), THL Food Products Holding Co., a Delaware corporation ("Holdings"),
the Lenders, the Administrative Agent, the other Agents, the Swing Line Lender
and the L/C Issuer named therein have entered into the Credit Agreement dated as
of November 20, 2003 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement");

          WHEREAS, in connection with the Credit Agreement, the Company,
Holdings and certain of the Subsidiary Guarantors have entered into the Security
Agreement (as amended, supplemented or otherwise modified from time to time, the
"Security Agreement"), in favor of the Administrative Agent for the benefit of
the Lenders;

          WHEREAS, simultaneously herewith, pursuant to the Agreement and Plan
of Merger dated as of October 10, 2003 (the "Merger Agreement") between
Holdings, the Company, M-Foods Investors, LLC, M-Foods Holdings, Inc. ("M-Foods
Holdings"), and certain other stockholders of M-Foods Holdings, the Company has
merged (the "First Merger") with and into M-Foods Holdings with M-Foods Holdings
being the surviving corporation (the "Surviving Corporation") and, immediately
thereupon, Michael Foods, Inc., a Minnesota corporation and wholly-owned direct
subsidiary of M-Foods Holdings ("MFI"), has merged (the "Second Merger", and
together with the First Merger, the "Mergers") with and into the Surviving
Corporation with the Surviving Corporation being the surviving corporation.
Thereafter the Surviving Corporation has changed its name to Michael Foods,
Inc., a Delaware corporation.

          WHEREAS, this Assumption Agreement is executed and delivered pursuant
to the Credit Agreement;

          NOW, THEREFORE, IT IS AGREED:

          1. Credit Agreement. By executing and delivering this Assumption
Agreement, Michael Foods hereby assumes all rights, title, interests,
obligations and liabilities of all and whatever nature of the Company under the
Credit Agreement, the Security Agreement and each of the other Loan Documents
(in furtherance of and in addition to, and not in lieu of, any assumption or
deemed assumption by operation of law) from and after the date hereof with the
same force and effect as if originally the "Borrower" under the Credit Agreement
and a "Grantor" under the Security Agreement and, to the extent the Company was
a party thereto,

                                       9



each other Loan Document. Without limiting the generality of the foregoing,
Michael Foods hereby expressly agrees to observe and perform and be bound by all
of the terms, covenants, representations, warranties, and agreements contained
in the Credit Agreement and each other Loan Document delivered thereunder which
are binding upon, and to be observed or performed by, the Borrower. Michael
Foods hereby ratifies and confirms the validity of, and all of its obligations
and liabilities (including the Obligations) under, the Credit Agreement and such
other Loan Documents. Michael Foods hereby represents and warrants that after
giving effect to this Assumption Agreement, each of the representations and
warranties contained in Section 5 of the Credit Agreement is true and correct in
all material respects on and as of the date hereof.

          2. Effect on the Credit Agreement and Loan Documents. On and after the
effectiveness of this Assumption Agreement, each reference in each of the Credit
Agreement and each other Loan Document to the "Borrower," or words to that
effect shall mean and be a reference to Michael Foods and Michael Foods shall be
the "Borrower" for all purposes of the Credit Agreement and the other Loan
Documents.

          3. Governing Law. This Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

          4. Loan Document. This Agreement shall constitute a Loan Document.

                                       10



          IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.

                                    MICHAEL FOODS, INC.
                                    (formerly known as M-Foods Holdings, Inc.)
                                    By:
                                        ----------------------------------------
                                    Name:  John D. Reedy
                                    Title: Chief Financial Officer and
                                           Treasurer


Acknowledged:

THL FOOD PRODUCTS HOLDING CO.


By:
    --------------------------------
Name: John D. Reedy
Title: Chief Financial Officer and Treasurer


BANK OF AMERICA, N.A., as Administrative Agent


By:
    --------------------------------
Name:
      ------------------------------

EX-10.2

                                                                    EXHIBIT 10.2

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

                      SENIOR UNSECURED TERM LOAN AGREEMENT

                          Dated as of November 20, 2003

                                      among

                             THL FOOD PRODUCTS CO.,

                                as the Borrower,

                         THL FOOD PRODUCTS HOLDING CO.,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                            The Lenders Party Hereto,

                       BANC OF AMERICA SECURITIES LLC and

                         DEUTSCHE BANK SECURITIES INC.,

                as Joint Lead Arrangers and Joint Book Managers,

                                       and

                        DEUTSCHE BANK SECURITIES INC. and

                               UBS SECURITIES LLC,

                            as Co-Syndication Agents

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



                                TABLE OF CONTENTS

Section                                                                     Page
- -------                                                                     ----

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

1.01     Defined Terms........................................................1
1.02     Other Interpretive Provisions.......................................31
1.03     Accounting Terms....................................................32
1.04     Rounding............................................................32
1.05     References to Agreements and Laws...................................32
1.06     Times of Day........................................................32
1.07     Timing of Payment or Performance....................................32
1.08     Currency Equivalents Generally......................................33

                                  ARTICLE II
                        THE COMMITMENTS AND TERM LOANS

2.01     The Term Loans......................................................33
2.02     Borrowing, Conversions and Continuations of Term Loans..............33
2.03     Prepayments.........................................................34
2.04     Repayment of Term Loans.............................................36
2.05     Interest............................................................36
2.06     Fees................................................................36
2.07     Computation of Interest and Fees....................................36
2.08     Evidence of Indebtedness............................................37
2.09     Payments Generally..................................................37
2.10     Sharing of Payments.................................................39

                                  ARTICLE III
                TAXES, INCREASED COST PROTECTION AND ILLEGALITY

3.01     Taxes...............................................................40
3.02     Illegality..........................................................42
3.03     Inability to Determine Rates........................................42
3.04     Increased Cost and Reduced Return; Capital Adequacy; Reserves
            on Eurodollar Rate Loans.........................................43
3.05     Funding Losses......................................................44
3.06     Matters Applicable to All Requests for Compensation.................44
3.07     Replacement of Lenders under Certain Circumstances..................45
3.08     Survival............................................................46



                                   ARTICLE IV
                     CONDITIONS PRECEDENT TO THE TERM LOANS

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

5.01     Existence, Qualification and Power; Compliance with Laws............49
5.02     Authorization; No Contravention.....................................50
5.03     Governmental Authorization; Other Consents..........................50
5.04     Binding Effect......................................................50
5.05     Financial Statements; No Material Adverse Effect....................50
5.06     Litigation..........................................................52
5.07     No Default..........................................................52
5.08     Ownership of Property; Liens........................................52
5.09     Environmental Compliance............................................52
5.10     Insurance...........................................................53
5.11     Taxes...............................................................53
5.12     ERISA Compliance....................................................53
5.13     Subsidiaries; Equity Interests......................................54
5.14     Margin Regulations; Investment Company Act; Public Utility
            Holding Company Act..............................................54
5.15     Disclosure..........................................................54
5.16     Compliance with Laws................................................55
5.17     Intellectual Property; Licenses, Etc................................55
5.18     Solvency............................................................55
5.19     Tax Shelter Regulations.............................................55

                                  ARTICLE VI
                             AFFIRMATIVE COVENANTS

6.01     Financial Statements................................................56
6.02     Certificates; Other Information.....................................56
6.03     Notices.............................................................58
6.04     Payment of Obligations..............................................58
6.05     Preservation of Existence, Etc......................................59
6.06     Maintenance of Properties...........................................59
6.07     Maintenance of Insurance............................................59
6.08     Compliance with Laws................................................59
6.09     Books and Records...................................................59
6.10     Inspection Rights...................................................59
6.11     Use of Proceeds.....................................................60
6.12     Covenant to Guarantee Obligations...................................60
6.13     Compliance with Environmental Laws..................................60

                                  ARTICLE VII
                              NEGATIVE COVENANTS

7.01     Liens...............................................................60

                                      ii



7.02     Investments.........................................................63
7.03     Incurrence of Indebtedness..........................................65
7.04     Fundamental Changes.................................................66
7.05     Asset Sales.........................................................67
7.06     Restricted Payments.................................................68
7.07     Change in Nature of Business........................................72
7.08     Transactions with Affiliates........................................72
7.09     Burdensome Agreements...............................................72
7.10     Use of Proceeds.....................................................73
7.11     Amendments of Organization Documents................................73
7.12     Accounting Changes..................................................73
7.13     Amendment of Merger Agreement.......................................73
7.14     Holding Company.....................................................73
7.15     Prepayments, Amendments of Indebtedness.............................73

                                 ARTICLE VIII
                        EVENTS OF DEFAULT AND REMEDIES

8.01     Events of Default...................................................73
8.02     Remedies Upon Event of Default......................................75
8.03     Application of Funds................................................76

                                  ARTICLE IX
                     ADMINISTRATIVE AGENT AND OTHER AGENTS

9.01     Appointment and Authorization of Agents.............................77
9.02     Delegation of Duties................................................77
9.03     Liability of Agents.................................................77
9.04     Reliance by Agents..................................................77
9.05     Notice of Default...................................................78
9.06     Credit Decision; Disclosure of Information by Agents................78
9.07     Indemnification of Agents...........................................79
9.08     Agents in their Individual Capacities...............................79
9.09     Successor Agents....................................................80
9.10     Administrative Agent May File Proofs of Claim.......................80
9.11     Guaranty Matters....................................................81
9.12     Other Agents; Arrangers and Managers................................81
9.13     Appointment of Supplemental Administrative Agents...................81

                                   ARTICLE X
                                 MISCELLANEOUS

10.01    Amendments, Etc.....................................................82
10.02    Notices and Other Communications; Facsimile Copies..................83
10.03    No Waiver; Cumulative Remedies......................................84
10.04    Attorney Costs, Expenses and Taxes..................................84
10.05    Indemnification by the Borrower.....................................85

                                      iii



10.06    Payments Set Aside..................................................86
10.07    Successors and Assigns..............................................86
10.08    Confidentiality.....................................................89
10.09    Setoff..............................................................90
10.10    Interest Rate Limitation............................................90
10.11    Counterparts........................................................90
10.12    Integration.........................................................91
10.13    Survival of Representations and Warranties..........................91
10.14    Severability........................................................91
10.15    Tax Forms...........................................................91
10.16    Governing Law.......................................................93
10.17    Waiver of Right to Trial by Jury....................................93
10.18    Binding Effect......................................................94

SIGNATURES...................................................................S-1

                                       iv



SCHEDULES

I           Guarantors
2.01        Commitments and Pro Rata Shares
5.05        Supplement to Interim Financial Statements
5.09        Environmental Matters
5.13        Subsidiaries and Other Equity Investments
7.01        Existing Liens
7.02        Existing Investments
7.03        Existing Indebtedness
10.02       Administrative Agent's Office, Certain Addresses for Notices

EXHIBITS

Form of

A           Committed Loan Notice
B           Term Note
C           Compliance Certificate
D           Assignment and Assumption
E-1         Parent Guaranty
E-2         Subsidiary Guaranty
F-1         Opinion Matters - Counsel to Loan Parties
F-2         Opinion Matters - Local Counsel to Loan Parties
G           Assumption Agreement

                                       v



                      SENIOR UNSECURED TERM LOAN AGREEMENT

          This SENIOR UNSECURED TERM LOAN AGREEMENT ("Agreement") is entered
into as of November 20, 2003, among THL FOOD PRODUCTS CO., a Delaware
corporation (the "Company", and together with the Surviving Corporation (as
hereinafter defined), the "Borrower"), THL FOOD PRODUCTS HOLDING CO., a Delaware
corporation ("Holdings"), each lender from time to time party hereto
(collectively, the "Lenders" and individually, a "Lender"), DEUTSCHE BANK
SECURITIES INC. and UBS SECURITIES LLC, as Co-Syndication Agents, and BANK OF
AMERICA, N.A., as Administrative Agent.

                             PRELIMINARY STATEMENTS

          The Company was organized by Holdings to acquire (the "Acquisition")
all of the Equity Interests of M-Foods Holdings, Inc., a Delaware corporation
(the "Target Company").

          Pursuant to the Agreement and Plan of Merger dated as of October 10,
2003 (the "Merger Agreement") between Holdings, the Company, M-Foods Investors,
LLC, the Target Company, and certain other stockholders of the Target Company,
the Company agreed to merge (the "First Merger") with and into the Target
Company with the Target Company being the surviving corporation (the "Surviving
Corporation") in order to effect the Acquisition and, in connection therewith,
Michael Foods, Inc., a Minnesota corporation and wholly-owned direct subsidiary
of the Target Company ("MFI"), agreed to merge (the "Second Merger", and
together with the First Merger, the "Mergers") with and into the Surviving
Corporation with the Surviving Corporation being the surviving entity.
Thereafter, the Surviving Corporation shall change its name to Michael Foods,
Inc., a Delaware corporation.

          The Company has requested that simultaneously with the consummation of
the First Merger, the Lenders make Term Loans to the Company in an aggregate
amount of $135,000,000 to pay, among other things, the cash consideration for
the Acquisition and the First Merger.

          The Lenders have indicated their willingness to lend on the terms and
subject to the conditions set forth herein.

          In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

          1.01 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:

          "Acquisition" has the meaning specified in the Preliminary Statements
to this Agreement.

          "Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.



          "Administrative Agent's Office" means the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 10.02, or such
other address or account as the Administrative Agent may from time to time
notify the Borrower and the Lenders.

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

          "Affiliate" means, with respect to any 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. "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.

          "Agent-Related Persons" means the Administrative Agent, together with
its Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

          "Agents" means, collectively, the Administrative Agent, the
Co-Syndication Agents and the Supplemental Administrative Agents (if any).

          "Agreement" means this Senior Unsecured Term Loan Agreement.

          "Applicable Rate" means a percentage per annum equal to (A) for
Eurodollar Rate Loans, 3.75% and (B) for Base Rate Loans, 2.75%.

          "Approved Domestic Bank" has the meaning specified in clause (b) of
the definition of "Cash Equivalents".

          "Approved Foreign Bank" has the meaning specified in clause (f) of the
definition of "Cash Equivalents".

          "Approved Fund" means any Fund that is administered, advised or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers, advises or manages a Lender.

          "Arrangers" means BAS and Deutsche Bank Securities Inc., in their
capacities as exclusive joint lead arrangers and exclusive joint book managers.

          "Asset Sale" means: (i) the sale, lease, conveyance or other
disposition of any assets or rights; provided, that the sale, lease, conveyance
or other disposition of all or substantially all of the assets of Holdings, the
Borrower and its Subsidiaries taken as a whole will be governed by Section
2.03(b)(i) and/or Section 7.04 hereof and not by Section 7.05; and (ii) the
issuance or sale of Equity Interests by any of the Borrower's Subsidiaries or
the sale of Equity Interests in any of its Subsidiaries.

          Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales:

                                       2



          (i) any single transaction or series of related transactions that
     involves assets having a fair market value of less than $5,000,000;

          (ii) a transfer of assets between or among Holdings and its
     Subsidiaries;

          (iii) an issuance or sale of Equity Interests by a Subsidiary of the
     Borrower to the Borrower or to another Subsidiary of the Borrower;

          (iv) the sale, lease, sublease, license, sublicense or consignment, as
     the case may be, of equipment, inventory, or other assets in the ordinary
     course of business, including leases with a duration of no greater than
     twenty-four months with respect to facilities which are temporarily not in
     use or pending their disposition;

          (v) the sale or other disposition of cash or Cash Equivalents;

          (vi) a Restricted Payment or Investment that is permitted by Section
     7.06 and/or Section 7.02;

          (vii) the licensing of intellectual property to third Persons on
     customary terms as determined by the Board of Directors in good faith;

          (viii) any sale or disposition of any property or equipment that has
     become damaged, worn-out, obsolete, condemned, given over in lieu of deed
     or otherwise unsuitable or not required for the ordinary course of the
     business of the Borrower and its Subsidiaries; and

          (ix) any sale of Equity Interests in, or Indebtedness or other
     securities of, a Subsidiary of the Borrower that is not a Guarantor.

          "Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit D.

          "Assumption Agreement" has the meaning specified in Article IV.

          "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

          "Attributable Indebtedness" means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a capital lease.

          "Audited Financial Statements" means the audited consolidated balance
sheet of MFI and its Subsidiaries for the fiscal years ended December 31, 2001
and December 31, 2002, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal year of MFI and
its Subsidiaries, including the notes thereto.

                                       3



          "Bank of America" means Bank of America, N.A. and its successors.

          "BAS" means Banc of America Securities LLC and its successors.

          "Base Rate" means for any day a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." The "prime rate" is a rate set by Bank of
America based upon various factors including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

          "Base Rate Loan" means a Term Loan that bears interest based on the
Base Rate.

          "Board of Directors" means (i) with respect to a corporation, the
board of directors of the corporation or committee thereof authorized to
exercise the power of the board of directors of such corporation; (ii) with
respect to a partnership, the Board of Directors of the general partner of the
partnership; and (iii) with respect to any other Person, the board or committee
of such Person serving a similar function.

          "Borrower" has the meaning specified in the introductory paragraph to
this Agreement.

          "Borrower Parties" means the collective reference to the Borrower and
its Subsidiaries, and "Borrower Party" means any one of them.

          "Borrowing" means the borrowing on the Closing Date consisting of
simultaneous Term Loans of the same Type and, in the case of Eurodollar Rate
Loans, having the same Interest Period made by each of the Lenders pursuant to
Section 2.01.

          "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where the Administrative Agent's Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

          "Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.

          "Cash Equivalents" means any of the following types of Investments, to
the extent owned by the Borrower or any of its Subsidiaries:

          (a) readily marketable obligations issued or directly and fully
     guaranteed or insured by the United States or any agency or instrumentality
     thereof having maturities of not more than three hundred and sixty (360)
     days from the date of acquisition thereof; provided, that the full faith
     and credit of the United States is pledged in support thereof;

                                       4



          (b) time deposits with, or insured certificates of deposit or bankers'
     acceptances of, any commercial bank that (i) (A) is a Lender or (B) is
     organized under the laws of the United States, any state thereof or the
     District of Columbia or is the principal banking subsidiary of a bank
     holding company organized under the laws of the United States, any state
     thereof or the District of Columbia, and is a member of the Federal Reserve
     System, (ii) issues (or the parent of which issues) commercial paper rated
     at least P-1 (or the then equivalent grade) by Moody's or at least "A-1"
     (or the then equivalent grade) by S&P, and (iii) has combined capital and
     surplus of at least $500,000,000 (any such bank being an "Approved Domestic
     Bank"), in each case with maturities of not more than three hundred and
     sixty (360) days from the date of acquisition thereof;

          (c) commercial paper and variable or fixed rate notes issued by an
     Approved Domestic Bank (or by the parent company thereof) or any variable
     rate note issued by, or guaranteed by a domestic corporation rated A-1 (or
     the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof)
     or better by Moody's, in each case with maturities of not more than three
     hundred and sixty (360) days from the date of acquisition thereof; and

          (d) repurchase agreements entered into by any Person with a bank or
     trust company (including any of the Lenders) or recognized securities
     dealer having capital and surplus in excess of $500,000,000 for direct
     obligations issued by or fully guaranteed by the United States in which
     such Person shall have a perfected first priority security interest
     (subject to no other Liens) and having, on the date of purchase thereof, a
     fair market value of at least 100% of the amount of the repurchase
     obligations; and

          (e) Investments, classified in accordance with GAAP as Current Assets
     of the Borrower or any of its Subsidiaries, in money market investment
     programs registered under the Investment Company Act of 1940, which are
     administered by financial institutions having capital of at least
     $500,000,000, and the portfolios of which are limited such that 95% of such
     investments are of the character, quality and maturity described in clauses
     (a), (b), (c) and (d) of this definition; and

          (f) solely with respect to any Foreign Subsidiary, non-Dollar
     denominated (i) certificates of deposit of, bankers acceptances of, or time
     deposits with, any commercial bank which is organized and existing under
     the laws of the country in which such Foreign Subsidiary maintains its
     chief executive office and principal place of business provided such
     country is a member of the Organization for Economic Cooperation and
     Development, and whose short-term commercial paper rating from S&P is at
     least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
     equivalent thereof (any such bank being an "Approved Foreign Bank") and
     maturing within twelve (12) months of the date of acquisition and (ii)
     equivalents of demand deposit accounts which are maintained with an
     Approved Foreign Bank.

          "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.

                                       5



          "CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental Protection
Agency.

          "Change of Control" shall have the meaning specified in the Senior
Subordinated Notes Indenture.

          "Closing Date" means the first date all the conditions precedent in
Article IV are satisfied or waived in accordance therewith.

          "Co-Syndication Agents" means Deutsche Bank Securities Inc. and UBS
Securities LLC, as Co-Syndication Agents under the Loan Documents.

          "Code" means the U.S. Internal Revenue Code of 1986.

          "Commitment" means, as to each Lender, its obligation to make Term
Loans to the Borrower pursuant to Section 2.01 in an aggregate principal amount
at any one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.01 under the caption "Commitment" or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement. The aggregate Commitment of all Lenders shall be
$135,000,000 on the Closing Date, as such amount may be adjusted from time to
time in accordance with the terms of this Agreement.

          "Committed Loan Notice" means a notice of (a) the Borrowing, (b) a
conversion of Term Loans from one Type to the other, or (c) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall
be substantially in the form of Exhibit A.

          "Company" has the meaning specified in the introductory paragraph to
this Agreement.

          "Compensation Period" has the meaning specified in Section
2.09(c)(ii).

          "Compliance Certificate" means a certificate substantially in the form
of Exhibit C.

          "Consolidated EBITDA" means, as of any date for the applicable period
ending on such date with respect to any Person and its Subsidiaries on a
consolidated basis, the sum of (a) Consolidated Net Income, plus (b) an amount
which, in the determination of Consolidated Net Income for such period, has been
deducted for, without duplication,

          (i) total interest expense,

          (ii) income, franchise and similar taxes and any tax distributions
     permitted to be made pursuant to clause (vi) of the second sentence of
     Section 7.06,

          (iii) depreciation and amortization expense,

          (iv) letter of credit fees,

                                       6



          (v) non-cash expenses resulting from any employee benefit or
     management compensation plan or the grant of stock and stock options to
     employees of Holdings, the Borrower or any of their respective Subsidiaries
     pursuant to a written plan or agreement or the treatment of such options
     under variable plan accounting,

          (vi) all extraordinary charges,

          (vii) non-cash amortization of financing costs of such Person and its
     Subsidiaries,

          (viii) cash expenses incurred in connection with the Transaction or,
     to the extent permitted hereunder, any Investment permitted under Section
     7.02, Equity Issuance or Debt Issuance (in each case, whether or not
     consummated),

          (ix) any losses (or minus any gains) realized upon the disposition of
     property outside of the ordinary course of business,

          (x) to the extent actually reimbursed, expenses incurred to the extent
     covered by indemnification provisions in any agreement in connection with a
     Permitted Acquisition,

          (xi) to the extent covered by insurance, expenses with respect to
     liability or casualty events, business interruption or product recalls,

          (xii) management fees permitted under Section 7.08(d),

          (xiii) any non-cash purchase accounting adjustment and any step-ups
     with respect to re-valuing assets and liabilities in connection with the
     Transaction or any Investment permitted under Section 7.02,

          (xiv) non-cash losses from Joint Ventures and non-cash minority
     interest reductions,

          (xv) fees and expenses in connection with the exchange of the Senior
     Subordinated Notes for registered notes with identical terms as
     contemplated by the Senior Subordinated Notes Indenture or exchanges or
     refinancings permitted under the definition of Permitted Debt,

          (xvi) non-cash, non-recurring charges,

          (xvii) other non-recurring charges in an aggregate amount not to
     exceed $4,000,000 during any four (4) consecutive fiscal quarter period,

          (xviii) expenses representing the implied principal component under
     Synthetic Lease Obligations,

                                       7



          (xix) expenses in connection with payments made by any such Person or
     its Subsidiaries with respect to industrial revenue bond financings and
     Guarantees in respect thereof,

          (xx) losses from discontinued operations not to exceed $2,000,000
     during any period of four (4) consecutive fiscal quarters, and

          (xxi) other expenses of such Person and its Subsidiaries reducing
     Consolidated Net Income which do not represent a cash item in such period
     or any future period, minus

          (c) an amount which, in the determination of Consolidated Net Income,
     has been included for

          (i) all extraordinary gains and non-cash income during such period and

          (ii) any gains realized upon the disposition of property outside of
     the ordinary course of business plus/minus

          (d) unrealized losses/gains in respect of Swap Contracts, all as
     determined in accordance with GAAP; provided, however, that,
     notwithstanding any other provision to the contrary contained in this
     Agreement, for purposes of any calculation of the Senior Leverage Ratio or
     the Interest Coverage Ratio, no more than 15% of the total Consolidated
     EBITDA for the applicable period shall be attributable to Foreign
     Subsidiaries and/or Investments in Joint Ventures; provided, further, that,
     Consolidated EBITDA for such period shall be calculated after giving Pro
     Forma Effect to the Dairy Disposition. Notwithstanding anything to the
     contrary, Consolidated EBITDA shall be deemed to be $35,500,000 for the
     fiscal quarter ended June 30, 2003 and $36,400,000 for the fiscal quarter
     ended September 30, 2003.

          "Consolidated Funded Indebtedness" means, with respect to any Person
and its Subsidiaries on a consolidated basis, without duplication,

          (a) all obligations of such Person for borrowed money,

          (b) all obligations of such Person evidenced by bonds, debentures,
     notes or similar instruments,

          (c) all obligations of such Person under conditional sale or other
     title retention agreements relating to property purchased by such Person
     (other than customary reservations or retentions of title under agreements
     with suppliers entered into in the ordinary course of business),

          (d) all obligations of such Person issued or assumed as the deferred
     purchase price of property or services purchased by such Person (other than
     accrued expenses and trade debt incurred in the ordinary course of
     business) which would appear as liabilities on a balance sheet of such
     Person and to the extent constituting contingent obligations,

                                       8



          (e) all Consolidated Funded Indebtedness of others secured by (or for
     which the holder of such Consolidated Funded Indebtedness has an existing
     right, contingent or otherwise, to be secured by) any Lien on, or payable
     out of the proceeds of production from, property owned or acquired by such
     Person, whether or not the obligations secured thereby have been assumed,

          (f) all Guarantees of such Person with respect to Consolidated Funded
     Indebtedness of another Person,

          (g) the implied principal component of all obligations of such Person
     under Capitalized Leases,

          (h) the maximum amount of all standby letters of credit issued or
     bankers' acceptances facilities created for the account of such Person and,
     without duplication, all drafts drawn thereunder (to the extent
     unreimbursed),

          (i) unless the holder thereof is a Loan Party or, if the issuer
     thereof is a Subsidiary of Holdings which is not a Loan Party, any other
     Subsidiary of Holdings, all Disqualified Equity Interests issued by such
     Person,

          (j) the principal portion of all obligations of such Person under
     Synthetic Lease Obligations, and

          (k) the Consolidated Funded Indebtedness of any partnership or
     unincorporated joint venture in which such Person is a general partner or a
     joint venturer to the extent such Consolidated Funded Indebtedness is
     recourse to such Person.


Notwithstanding any other provision of this Agreement to the contrary, (i) the
term "Consolidated Funded Indebtedness" shall not be deemed to include (x) any
earn-out obligation until such obligation becomes a liability on the balance
sheet of the applicable Person, (y) any deferred compensation arrangements or
(z) any non-compete or consulting obligations incurred in connection with
Permitted Acquisitions and (ii) the amount of Consolidated Funded Indebtedness
for which recourse is limited either to a specified amount or to an identified
asset of such Person shall be deemed to be equal to such specified amount (or,
if less, the fair market value of such identified asset).

          "Consolidated Interest Charges" means, as of any date for the
applicable period ending on such date with respect to any Person and its
Subsidiaries on a consolidated basis, interest expense (including the
amortization of debt discount and premium, the interest component under
Capitalized Leases and the implied interest component under Synthetic Lease
Obligations, but excluding, to the extent included in interest expense, (i) fees
and expenses associated with the consummation of the Transaction, (ii) annual
agency fees paid to the Administrative Agent, (iii) costs associated with
obtaining Swap Contracts and (iv) fees and expenses associated with any
Investment permitted under Section 7.02, Equity Issuance or Debt Issuance
(whether or not consummated)), as determined in accordance with GAAP, to the
extent the same are payable in cash with respect to such period.

                                       9



          "Consolidated Net Income" means, as of any date for the applicable
period ending on such date with respect to any Person and its Subsidiaries on a
consolidated basis, net income (excluding, without duplication, (i)
extraordinary items and (ii) any amounts attributable to Investments in any
Joint Venture to the extent that either (x) such amounts have not been
distributed in cash to such Person and its Subsidiaries during the applicable
period, (y) such amounts were not earned by such Joint Venture during the
applicable period or (z) there exists in respect of any future period any
encumbrance or restriction on the ability of such Joint Venture to pay dividends
or make any other distributions in cash on the Equity Interests of such Joint
Venture held by such Person and its Subsidiaries), as determined in accordance
with GAAP.

          "Consolidated Parties" means the collective reference to Holdings and
its Subsidiaries, and "Consolidated Party" means any one of them.

          "Consolidated Scheduled Funded Debt Payments" means, as of any date
for the applicable period ending on such date with respect to the Consolidated
Parties on a consolidated basis, the sum of all scheduled payments of principal
on Consolidated Funded Indebtedness during such period (including the implied
principal component of payments due on Capitalized Leases during such period and
Synthetic Lease Obligations, less the reduction for all voluntary prepayments or
mandatory prepayments required pursuant to Section 2.03, as determined in
accordance with GAAP.

          "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

          "Control" has the meaning specified in the definition of "Affiliate."

          "Credit Agreement" means that certain Credit Agreement, dated as of
the date hereof, by and among the Borrower, THL Food Products Holding Co., Bank
of America, N.A., as Administrative Agent, Deutsche Bank Securities Inc. and UBS
Securities LLC, as Co-Syndication Agents, and the other Lenders named therein
providing for up to $495,000,000 in term loan borrowings and $100,000,000 of
revolving credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced, restated,
substituted or refinanced in whole or in part from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including adding Subsidiaries of the Borrower as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.

          "Credit Facilities" means one or more debt facilities (including,
without limitation, the Credit Agreement), commercial paper facilities or
indentures, in each case with banks or other institutional lenders or a trustee
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables), letters
of credit or issuances of notes, in each case, as amended, restated, modified,
renewed, refunded, replaced, restated, substituted or refinanced in whole or in
part from time to time.

                                       10



          "Current Assets" means, with respect to any Person, all assets of such
Person that, in accordance with GAAP, would be classified as current assets on
the balance sheet of a company conducting a business the same as or similar to
that of such Person, after deducting appropriate and adequate reserves therefrom
in each case in which a reserve is proper in accordance with GAAP.

          "Dairy Disposition" means the disposition of the dairy business,
consisting of the development, manufacturing, processing, distribution,
marketing and sales of coffee creamers, half & half, whipping cream, soft-serve
mix and other specialty dairy items of MFI, to Suiza Dairy Group Inc., a
wholly-owned subsidiary of Dean Foods Company, the proceeds of which were
applied to the payment of taxes related to the operation and sale of the diary
business and repayment of a portion of MFI's senior bank debt.

          "Debt Issuance" means the issuance by any Person and its Subsidiaries
of any Indebtedness for borrowed money.

          "Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

          "Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

          "Default Rate" means an interest rate equal to (a) the Base Rate plus
(b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2.0% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Term Loan plus 2.0% per annum, in
each case, to the fullest extent permitted by applicable Laws.

          "Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Term Loans required to be funded by it hereunder within one (1)
Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within one (1) Business Day of
the date when due, unless the subject of a good faith dispute, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

          "Disqualified Equity Interests" means any Equity Interest which, by
its terms (or by the terms of any security or other Equity Interests into which
it is convertible or for which it is exchangeable), or upon the happening of any
event or condition (a) matures or is mandatorily redeemable, pursuant to a
sinking fund obligations or otherwise, (b) is redeemable at the option of the
holder thereof, in whole or in part, (c) provides for the scheduled payments of
dividends in cash, or (d) is or becomes convertible into or exchangeable for
Indebtedness or any other Equity Interests that would constitute Disqualified
Equity Interests, in each case, prior to the date that is ninety-one (91) days
after the Maturity Date.

          "Dollar" and "$" mean lawful money of the United States.

                                       11



          "Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States, any state thereof or the District of Columbia and any
other Subsidiary that is not a "controlled foreign corporation" under Section
957 of the Code.

          "Egg Products Inspection Act" means the Egg Products Inspection Act,
21 U.S.C.(S) 1031, et seq., and its implementing regulations.

          "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, and (ii) unless an Event of Default
has occurred and is continuing under Section 8.01(a) or (f), the Borrower (each
such approval not to be unreasonably withheld or delayed); provided, that
notwithstanding the foregoing, "Eligible Assignee" shall not include (i)
Holdings or any of its Affiliates or Subsidiaries or (ii) Highland Capital
Management, L.P. or any of its Affiliates or Subsidiaries.

          "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

          "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries 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.

          "Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.

          "Equity Contributions" means, collectively, (a) the contribution by
the Sponsor and by the Management Shareholders to Investors LLC of an aggregate
amount not less than $315,000,000, (b) the further contribution by Investors LLC
of all such contribution proceeds to Holdings, and (c) the further contribution
by Holdings of all such contribution proceeds to the Company in order to
consummate the Acquisition and the Mergers.

          "Equity Interests" means, with respect to any Person, all of the
shares, interests, rights, participations or other equivalents (however
designated) of capital stock of (or other ownership or profit interests or units
in) such Person and all of the warrants, options or other rights for the
purchase, acquisition or exchange from such Person of any of the foregoing
(including through convertible securities).

          "Equity Issuance" means any issuance for cash by any Person and its
Subsidiaries to any other Person of (a) its Equity Interests, (b) any of its
Equity Interests pursuant to the exercise

                                       12



of options or warrants, (c) any of its Equity Interests pursuant to the
conversion of any debt securities to equity or (d) any options or warrants
relating to its Equity Interests.

          "ERISA" means the Employee Retirement Income Security Act of 1974.

          "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

          "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party
or any ERISA Affiliate.

          "Eurodollar Rate" means, for any Interest Period with respect to any
Eurodollar Rate Loan:

          (a) the rate per annum equal to the rate determined by the
     Administrative Agent to be the offered rate that appears on the page of the
     Telerate screen (or any successor thereto) that displays an average British
     Bankers Association Interest Settlement Rate for deposits in Dollars (for
     delivery on the first day of such Interest Period) with a term equivalent
     to such Interest Period, determined as of approximately 11:00 a.m. (London
     time) two (2) Business Days prior to the first day of such Interest Period,
     or

          (b) if the rate referenced in the preceding clause (a) does not appear
     on such page or service or such page or service shall not be available, the
     rate per annum equal to the rate determined by the Administrative Agent to
     be the offered rate on such other page or other service that displays an
     average British Bankers Association Interest Settlement Rate for deposits
     in Dollars (for delivery on the first day of such Interest Period) with a
     term equivalent to such Interest Period, determined as of approximately
     11:00 a.m. (London time) two (2) Business Days prior to the first day of
     such Interest Period, or

          (c) if the rates referenced in the preceding clauses (a) and (b) are
     not available, the rate per annum determined by the Administrative Agent as
     the rate of interest at which deposits in Dollars for delivery on the first
     day of such Interest Period in same day funds in the approximate amount of
     the Eurodollar Rate Loan being made,

                                       13



     continued or converted by Bank of America and with a term equivalent to
     such Interest Period would be offered by Bank of America's London Branch to
     major banks in the London interbank eurodollar market at their request at
     approximately 4:00 p.m. (London time) two (2) Business Days prior to the
     first day of such Interest Period.

          "Eurodollar Rate Loan" means a Term Loan that bears interest at a rate
based on the Eurodollar Rate.

          "Event of Default" has the meaning specified in Section 8.01.

          "Excess Proceeds" has the meaning specified in Section 7.05.

          "Excluded Consideration" means, with respect to any Permitted
Acquisition, consideration consisting of (a) any Equity Interests (other than
Disqualified Equity Interests) of Holdings issued to the seller of the Equity
Interests, property or assets acquired in such Permitted Acquisition, (b) net
proceeds of any Permitted Equity Issuance consummated subsequent to the Closing
Date, (c) to the extent not required at such time to prepay the Term Loans
pursuant to Section 2.03(b)(ii), consideration consisting of the Net Proceeds of
any Asset Sale by Holdings or any of its Subsidiaries, (d) net proceeds of the
incurrence or issuance of any Permitted Subordinated Indebtedness permitted
under Section 7.03 and (e) 25% of the amount of Excess Cash Flow (as defined in
the Credit Agreement), or any similar term in any other Credit Agreement, for
any fiscal year (commencing with the fiscal year ended December 31, 2004).

          "Existing Credit Agreement" means that certain Credit Agreement dated
as of April 10, 2001 among the Target Company, MFI, the guarantors party
thereto, Bank of America, N.A., as agent, sole lead arranger and sole book
running manager, Bear, Stearns & Co., as syndication agent, and a syndicate of
lenders.

          "Existing Indebtedness" means Indebtedness outstanding on the date
hereof, other than under the Credit Agreement, the Senior Subordinated Notes
Indenture and this Agreement.

          "Existing Notes" means the 11 3/4% Senior Subordinated Notes due 2011
of MFI.

          "Existing Notes Indenture" means the Indenture dated as of March 27,
2001 between MFI and BNY Midwest Trust Company, as amended, supplemented or
otherwise modified to the Closing Date (including, after giving effect to the
amendments contemplated by the Existing Notes Tender Offer) and as may be
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, but only to the extent permitted under the
terms of the Loan Documents.

          "Existing Notes Tender Offer" means the offer by the Company to
purchase up to 100.0% of the Existing Notes and the consent solicitation by the
Company to certain amendments of the Existing Notes Indenture, all as described
in the Existing Notes Tender Offer Documents, pursuant to which at least 80.0%
of the Existing Notes are required to be tendered.

          "Existing Notes Tender Offer Documents" means (a) the Offer to
Purchase and Consent Solicitation Statement, dated October 20, 2003, (b) the
Dealer Manager Agreement

                                       14



between the Company and Banc of America Securities LLC, dated October 17, 2003,
and (c) the Second Supplemental Indenture between Michael Foods, Inc., certain
note guarantors and BNY Midwest Trust Company (to be entered into as of the
Closing Date).

          "Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided, that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

          "First Merger" has the meaning specified in the Preliminary Statements
to this Agreement.

          "Food, Drug, and Cosmetic Act" means the Food, Drug, and Cosmetic Act,
21 U.S.C.(S) 301, et seq., and its implementing regulations.

          "Food Industry Laws" means the Food Security Act, the Food, Drug, and
Cosmetic Act (21 U.S.C.(S) 321, et seq.), PACA, the Egg Products Inspection Act,
the Minnesota Food Law (Minnesota Statutes, Ch. 31), the MWPDA, and all other
applicable Federal, state and local laws governing the production, packaging and
distribution of food, and all applicable rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

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

          "Foreign Lender" has the meaning specified in Section 10.15(a)(i).

          "Foreign Subsidiary" means any direct or indirect Subsidiary of the
Borrower which is not a Domestic Subsidiary.

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

          "Fund" means any Person (other than a natural person) that is engaged
in making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

                                       15



          "Funded Debt" of any Person means Indebtedness of such Person that by
its terms matures more than one (1) year after the date of its creation or
matures within one (1) year from any date of determination but is renewable or
extendible, at the option of such Person, to a date more than one (1) year after
such date or arises under a revolving credit or similar agreement that obligates
the lender or lenders to extend credit during a period of more than one (1) year
after such date.

          "GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

          "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

          "Granting Lender" has the meaning specified in Section 10.07(g).

          "Guarantee" means, as to any Person, without duplication, any (a) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the "primary obligor") in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term "Guarantee" as a verb has a
corresponding meaning.

          "Guarantors" means, collectively, Holdings and the Subsidiaries of the
Borrower listed on Schedule I and each other Subsidiary of the Borrower that
shall be required to execute and deliver a guaranty or guaranty supplement
pursuant to Section 6.12.

                                       16



          "Guaranty" means, collectively, the Parent Guaranty and the Subsidiary
Guaranty.

          "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.

          "Holdings" has the meaning specified in the introductory paragraph to
this Agreement.

          "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

          (a) all obligations of such Person for borrowed money and all
     obligations of such Person evidenced by bonds, debentures, notes, loan
     agreements or other similar instruments;

          (b) the maximum amount of all letters of credit (including standby and
     commercial), bankers' acceptances, bank guaranties, surety bonds,
     performance bonds and similar instruments issued or created by or for the
     account of such Person;

          (c) net obligations of such Person under any Swap Contract;

          (d) all obligations of such Person to pay the deferred purchase price
     of property or services (other than trade accounts payable in the ordinary
     course of business);

          (e) indebtedness (excluding prepaid interest thereon) secured by a
     Lien on property owned or being purchased by such Person (including
     indebtedness arising under conditional sales or other title retention
     agreements and mortgage, industrial revenue bond, industrial development
     bond and similar financings), whether or not such indebtedness shall have
     been assumed by such Person or is limited in recourse;

          (f) all Attributable Indebtedness;

          (g) all obligations of such Person in respect of Disqualified Equity
     Interests; and

          (h) all Guarantees of such Person in respect of any of the foregoing.

          For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap

                                       17



Termination Value thereof as of such date. The amount of Indebtedness of any
Person for purposes of clause (e) shall be deemed to be equal to the lesser of
(i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market
value of the property encumbered thereby as determined by such Person in good
faith.

          "Indemnified Liabilities" has the meaning set forth in Section 10.05.

          "Indemnitees" has the meaning set forth in Section 10.05.

          "Information" has the meaning specified in Section 10.08.

          "Interest Coverage Ratio" means, with respect to the Borrower Parties
on a consolidated basis, as of the end of any fiscal quarter of the Borrower for
the four (4) fiscal quarter period ending on such date with respect to the
Borrower Parties on a consolidated basis, the ratio of (a) Consolidated EBITDA
of the Borrower Parties to (b) Consolidated Interest Charges of the Borrower
Parties; provided, that when calculating the Interest Coverage Ratio,
Consolidated Interest Charges shall be equal to, (i) for the period ending March
31, 2004, Consolidated Interest Charges for the fiscal quarter ending March 31,
2004 multiplied by four (4); (ii) for the period ending June 30, 2004,
Consolidated Interest Charges calculated for the two (2) fiscal quarters ending
June 30, 2004 multiplied by two (2); and (iii) for the period ending September
30, 2004, Consolidated Interest Charges for the three (3) fiscal quarters ending
September 30, 2004 multiplied by one and one-third (1-1/3).

          "Interest Payment Date" means, (a) as to any Term Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to such Term
Loan and the Maturity Date; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.

          "Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, or to the extent available, nine or twelve months
thereafter, as selected by the Borrower in its Committed Loan Notice; provided,
that:

          (a) any Interest Period that would otherwise end on a day that is not
     a Business Day shall be extended to the next succeeding Business Day unless
     such Business Day falls in another calendar month, in which case such
     Interest Period shall end on the next preceding Business Day;

          (b) any Interest Period that begins on the last Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest Period) shall end on
     the last Business Day of the calendar month at the end of such Interest
     Period; and

          (c) no Interest Period shall extend beyond the Maturity Date.

                                       18



          "Investment" means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of Equity Interests or debt or other securities of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption
of debt of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person and any arrangement pursuant to which the
investor incurs debt of the type referred to in clause (h) of the definition of
"Indebtedness" set forth in this Section 1.01 in respect of such Person, (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of all or substantially all of the property and assets or business of another
Person or assets constituting a business unit, line of business or division of
such Person, or (d) an Asset Sale of any property for less than the fair market
value thereof. For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment.

          "Investors LLC" means MF Investors, LLC, a Delaware limited liability
company.

          "IP Rights" has the meaning set forth in Section 5.17.

          "IRS" means the United States Internal Revenue Service.

          "Joint Venture" means (a) any Person which would constitute an "equity
method investee" of the Borrower or any of its Subsidiaries, (b) any other
Person designated by the Borrower in writing to the Administrative Agent (which
designation shall be irrevocable) as a "Joint Venture" for purposes of this
Agreement and more than 50% but less than 100% of whose Equity Interests are
directly owned by the Borrower or any of its Subsidiaries, and (c) any Person in
whom the Borrower or any of its Subsidiaries beneficially owns any Equity
Interest that is not a Subsidiary.

          "Junior Financing" has the meaning specified in Section 7.06.

          "Junior Financing Documentation" means the Senior Subordinated Notes,
the Senior Subordinated Notes Indenture or any documentation governing any other
Junior Financing.

          "Laws" means, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law, including all Food Industry
Laws.

          "Lender" has the meaning specified in the introductory paragraph to
this Agreement.

                                       19



          "Lending Office" means, as to any Lender, the office or offices of
such Lender described as such in such Lender's Administrative Questionnaire, or
such other office or offices as a Lender may from time to time notify the
Borrower and the Administrative Agent.

          "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing).

          "Loan Documents" means, collectively, this Agreement, the Notes, the
Guaranty, and the Assumption Agreement.

          "Loan Parties" means, collectively, the Borrower and each Guarantor.

          "Management Shareholders" means Gregg A. Ostrander and the other
members of management of the Borrower or its Subsidiaries who are investors in
Investors LLC on the Closing Date.

          "Material Adverse Effect" means (a) a material adverse effect on the
business, operations, assets, liabilities (actual or contingent) or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole,
(b) a material adverse effect on the ability of the Borrower or the Loan Parties
(taken as a whole) to perform their respective obligations under any Loan
Document to which the Borrower or any of the Loan Parties is a party or (c) a
material adverse effect on the rights and remedies of the Lenders under any Loan
Document.

          "Master Agreement" has the meaning specified in the definition of
"Swap Contract".

          "Maturity Date" means November 21, 2011.

          "Maximum Rate" has the meaning specified in Section 10.10.

          "Merger Agreement" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Mergers" has the meaning specified in the Preliminary Statements to
this Agreement.

          "MFI" has the meaning specified in the Preliminary Statements to this
Agreement.

          "Moody's" means Moody's Investors Service, Inc. and any successor
thereto.

          "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate makes or is

                                       20



obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

          "MWPDA" means the Minnesota Wholesale Produce Dealers Act, (Minnesota
Statutes, Ch. 27).

          "Net Proceeds" means, the aggregate cash proceeds received by the
Borrower or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale or disposition of such non-cash consideration,
including, without limitation, legal, accounting and investment banking fees,
and sales commissions, and any relocation expenses incurred as a result thereof,
in each case, after taking into account any available tax credits or deductions
and any tax sharing arrangements, and amounts required to be applied to the
repayment of Indebtedness (other than revolving credit Indebtedness, unless
there is a required reduction in commitments), secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any (1) reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP and (2) reserve or payment with respect to any liabilities
associated with such asset or assets and retained by the Borrower or any of its
Subsidiaries after such sale or other disposition thereof, including, without
limitation, severance costs, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction.

          "Non-Consenting Lender" has the meaning specified in Section 3.07(c).

          "Non-Recourse Debt" means Indebtedness:

          (i) as to which neither the Borrower nor any of its Subsidiaries (a)
     provides credit support of any kind (including any undertaking, agreement
     or instrument that would constitute Indebtedness), (b) is directly or
     indirectly liable as a guarantor or otherwise, or (c) constitutes the
     lender;

          (ii) no default with respect to which (including any rights that the
     holders thereof may have to take enforcement action against a Subsidiary of
     the Borrower) would permit upon notice, lapse of time or both any holder of
     any other Indebtedness (other than the Term Loans) of the Borrower or any
     of its Subsidiaries to declare a default on such other Indebtedness or
     cause the payment thereof to be accelerated or payable prior to its stated
     maturity; and

          (iii) as to which the lenders have been notified in writing that they
     will not have any recourse to the stock or assets of the Borrower or any of
     its Subsidiaries.

          "Note" means a promissory note of the Borrower payable to any Lender
or its registered assigns, in substantially the form of Exhibit B hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Term Loans made by such Lender.

          "NPL" means the National Priorities List under CERCLA.

                                       21



          "Obligations" means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Term Loan, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding. Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Loan Documents include (a) the
obligation to pay principal, interest, charges, expenses, fees, Attorney Costs,
indemnities and other amounts payable by any Loan Party under any Loan Document
and (b) the obligation of any Loan Party to reimburse any amount in respect of
any of the foregoing that any Lender, in its sole discretion, may elect to pay
or advance on behalf of such Loan Party.

          "Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

          "Other Taxes" has the meaning specified in Section 3.01(b).

          "Outstanding Amount" means, on any date, the aggregate outstanding
principal amount of the Term Loans after giving effect to the Borrowing and any
prepayments or repayments thereof.

          "PACA" means the Perishable Agricultural Commodities Act, 7
U.S.C.(S) 499a, et seq. and its implementing regulations.

          "Parent Guaranty" means the Parent Guaranty made by Holdings in favor
of the Administrative Agent on behalf of the Lenders, substantially in the form
of Exhibit E-1.

          "Participant" has the meaning specified in Section 10.07(d).

          "PBGC" means the Pension Benefit Guaranty Corporation.

          "Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or
any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five (5) plan years.

          "Permitted Acquisition" has the meaning specified in Section 7.02(i).

                                       22



          "Permitted Debt", means

          (a) in the case of the Borrower:

               (i) Indebtedness in respect of Swap Contracts designed to hedge
          against fluctuations in interest rates, foreign exchange rates or
          commodities pricing risks incurred in the ordinary course of business
          and consistent with prudent business practice and not for speculative
          purposes;

               (ii) Indebtedness evidenced by the Senior Subordinated Notes and
          any Permitted Refinancing thereof;

               (iii) Indebtedness evidenced by the Existing Notes remaining
          outstanding after giving effect to the consummation of the Existing
          Notes Tender Offer;

               (iv) Indebtedness evidenced by the Credit Agreement (including
          any outstanding commitments thereunder) as in effect as of the date
          hereof; and

               (v) Permitted Subordinated Indebtedness in an aggregate amount
          not to exceed $25,000,000 at any time outstanding;

          (b) in the case of the Borrower and its Subsidiaries:

               (i) Indebtedness of the Loan Parties under the Loan Documents;

               (ii) Indebtedness outstanding on the date hereof and listed on
          Schedule 7.03 and any modifications, refinancings, refundings,
          renewals or extensions thereof; provided, that (A) the amount of such
          Indebtedness is not increased at the time of such modification,
          refinancing, refunding, renewal or extension except by an amount equal
          to a reasonable premium or other reasonable amount paid, and fees and
          expenses reasonably incurred, in connection with such refinancing and
          by an amount equal to any existing commitments unutilized thereunder
          or as otherwise permitted pursuant to this definition of Permitted
          Debt or Section 7.03, and (B) the terms and conditions (including, if
          applicable, as to collateral and subordination) of any such modified,
          extending, refunding or refinancing Indebtedness are not materially
          less favorable to the Loan Parties or the Lenders than the terms and
          conditions of the Indebtedness being modified, extended, refunded or
          refinanced;

               (iii) Guarantees of the Borrower and its Subsidiaries in respect
          of Indebtedness of the Borrower or such Subsidiary otherwise permitted
          hereunder;

               (iv) Indebtedness of (A) any Loan Party owing to any other Loan
          Party, (B) of any Subsidiary of the Borrower that is not a Loan Party
          owed to (1) any other Subsidiary of Holdings that is not a Loan Party
          or (2) Holdings or a Loan Party in respect of an Investment permitted
          under Section 7.02(c) or Section 7.02(o), and (C) of any Loan Party to
          any Subsidiary of Holdings which is

                                       23



          not a Loan Party; provided, that all such Indebtedness of any Loan
          Party in this clause (iv)(C) must be expressly subordinated to the
          Obligations;

               (v) Attributable Indebtedness and purchase money obligations
          (including obligations in respect of mortgage, industrial revenue
          bond, industrial development bond and similar financings) to finance
          the purchase, repair or improvement of fixed or capital assets within
          the limitations set forth in Section 7.01(i); provided, however, that
          the aggregate amount of all such Indebtedness at any one time
          outstanding shall not exceed $20,000,000;

               (vi) Indebtedness of Foreign Subsidiaries in an aggregate
          principal amount at any time outstanding for all such Persons taken
          together not exceeding $20,000,000;

               (vii) Indebtedness in respect of Swap Contracts designed to hedge
          against foreign exchange rates or commodities pricing risks incurred
          in the ordinary course of business and not for speculative purposes;

               (viii) Indebtedness (other than for borrowed money) subject to
          Liens permitted under Section 7.01;

               (ix) Indebtedness of the Borrower and its Subsidiaries (A)
          assumed in connection with any Permitted Acquisition or (B) owed to
          the seller of any property acquired in a Permitted Acquisition on an
          unsecured subordinated basis, in each case, so long as both
          immediately prior and after giving effect thereto, no Event of Default
          shall exist or result therefrom, after giving effect to such Permitted
          Acquisition and the incurrence or issuance of such Indebtedness and
          such Indebtedness is otherwise permitted under this definition of
          Permitted Debt, and, in each case, any Permitted Refinancing of such
          Indebtedness;

               (x) Indebtedness representing deferred compensation to employees
          of the Borrower and its Subsidiaries;

               (xi) Indebtedness consisting of promissory notes issued by any
          Loan Party to current or former officers, directors and employees,
          their respective estates, spouses or former spouses to finance the
          purchase or redemption of Equity Interests of Holdings or Investors
          LLC permitted under Section 7.06;

               (xii) Indebtedness incurred by the Borrower or its Subsidiaries
          in a Permitted Acquisition or an Asset Sale under agreements providing
          for the adjustment of the purchase price or similar adjustments;

               (xiii) Indebtedness consisting of obligations of the Borrower or
          its Subsidiaries under deferred compensation or other similar
          arrangements incurred by such Person in connection with the
          Transaction and Permitted Acquisitions in an aggregate amount not to
          exceed $5,000,000;

                                       24



               (xiv) Indebtedness in respect of netting services, overdraft
          protections and similar arrangements in each case in connection with
          deposit accounts;

               (xv) Indebtedness in an aggregate principal amount not to exceed
          $20,000,000 at any time outstanding; and

               (xvi) Guarantees of the Indebtedness of the Borrower and its
          Subsidiaries evidenced by the Credit Agreement as in effect as of the
          date hereof;

          (c) in the case of the Holdings:

               (i) Indebtedness under the Loan Documents;

               (ii) Guarantees of the Indebtedness evidenced by the Credit
          Agreement (including any outstanding commitments thereunder) as in
          effect as the date hereof;

               (iii) Permitted Holdco Debt;

               (iv) unsecured Guarantees of obligations of its Subsidiaries in
          the ordinary course of business;

               (v) Indebtedness permitted pursuant to clause (b)(iv) above;

               (vi) Indebtedness owed to the seller of any property acquired in
          a Permitted Acquisition on an unsecured subordinated basis; and

               (vii) Indebtedness of the type described in clauses (b)(viii),
          (xi) and (xii) above.

          "Permitted Encumbrances" has the meaning specified in deeds of trust,
trust deeds and mortgages entered into by the Loan Parties pursuant to the
Credit Agreement.

          "Permitted Equity Issuance" means any sale or issuance of any Equity
Interests (other than Disqualified Equity Interests) of Holdings (and, after a
Qualifying IPO, of the Borrower) to the (a) extent permitted hereunder and (b)
the net proceeds of which are not required to be applied to the prepayment of
any Credit Facilities.

          "Permitted Holdco Debt" means unsecured Indebtedness of Holdings that
(A) is not subject to any Guarantee by the Borrower or any of its Subsidiaries,
(B) will not mature prior to the date that is ninety-one (91) days after the
Maturity Date, (C) has no scheduled amortization or payments of principal, (D)
does not permit any payments in cash of interest or other amounts in respect of
the principal thereof for at least five (5) years from the date of the issuance
or incurrence thereof, and (E) has mandatory prepayment, repurchase or
redemption, covenant, default and remedy provisions customary for senior
discount notes of an issuer that is the parent of a borrower under senior
secured credit facilities, and in any event, with respect to covenant, default
and remedy provisions, no more restrictive than those contained in the Senior
Subordinated Notes Indenture, taken as a whole (other than provisions customary
for senior

                                       25



discount notes of a holding company); provided any such Indebtedness shall
constitute Permitted Holdco Debt only if both before and after giving effect to
the issuance or incurrence thereof, no Default or Event of Default shall have
occurred and be continuing.

          "Permitted Refinancing " means, with respect to any Person, any
modification, refinancing, refunding, renewal or extension of any Indebtedness
of such Person; provided that (a) the principal amount (or accreted value, if
applicable) thereof does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so modified, refinanced, refunded, renewed or
extended except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such
modification, refinancing, refunding, renewal or extension and by an amount
equal to any existing commitments unutilized thereunder or as otherwise
permitted pursuant to Section 7.03, (b) such modification, refinancing,
refunding, renewal or extension has a final maturity date equal to or later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
modified, refinanced, refunded, renewed or extended, (c) if the Indebtedness
being modified, refinanced, refunded, renewed or extended is subordinated in
right of payment to the Obligations, such modification, refinancing, refunding,
renewal or extension is subordinated in right of payment to the Obligations on
terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being modified, refinanced, refunded,
renewed or extended, (d) the terms and conditions (including, if applicable, as
to collateral) of any such modified, refinanced, refunded, renewed or extended
Indebtedness are not materially less favorable to the Loan Parties or the
Lenders than the terms and conditions of the Indebtedness being modified,
refinanced, refunded, renewed or extended, (e) such modification, refinancing,
refunding, renewal or extension is incurred by the Person who is the obligor on
the Indebtedness being modified, refinanced, refunded, renewed or extended, and
(f) at the time thereof, no Default shall have occurred and be continuing.

          "Permitted Subordinated Indebtedness" means any unsecured Indebtedness
that (a) is expressly subordinated to the prior payment in full in cash of the
Obligations on terms and conditions no less favorable to the Lenders than the
terms and conditions of the Senior Subordinated Notes, (b) will not mature prior
to the date that is ninety-one (91) days after the Maturity Date, (c) has no
scheduled amortization or payments of principal prior to the Maturity Date, and
(d) has covenant, default and remedy provisions no more restrictive, or
mandatory prepayment, repurchase or redemption provisions not more onerous or
expansive in scope, than those contained in the Senior Subordinated Notes
Indenture, taken as a whole; provided any such Indebtedness shall constitute
Permitted Subordinated Indebtedness only if both before and after giving effect
to the issuance or incurrence thereof, no Default or Event of Default shall have
occurred and be continuing.

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

          "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by any Loan Party or, with respect to any
such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.

                                       26



          "Pro Forma Effect" means, for purposes of calculating compliance with
clause (a)(vii) of Article IV in respect of the Dairy Disposition, that such
Dairy Disposition and the transactions in connection therewith shall be deemed
to have occurred as of the first day of the applicable period of measurement in
compliance with the following: (a) income statement items (whether positive or
negative) attributable to the property or Person subject to the Dairy
Disposition shall be excluded, and (b) any retirement of Indebtedness.

          "Pro Rata Share" means, with respect to each Lender at any time, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the aggregate Commitments at
such time; provided, that if the commitment of each Lender to make Term Loans
has been terminated, then the Pro Rata Share of each Lender shall be determined
based on the Pro Rata Share of such Lender immediately prior to such termination
and after giving effect to any subsequent assignments made pursuant to the terms
hereof. The initial Pro Rata Share of each Lender is set forth opposite the name
of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.

          "Qualifying IPO" means the issuance by Holdings of its common Equity
Interests in an underwritten primary public offering (other than a public
offering pursuant to a registration statement on Form S-8) pursuant to an
effective registration statement filed with the SEC in accordance with the
Securities Act (whether alone or in connection with a secondary public
offering).

          "Register" has the meaning set forth in Section 10.07(c).

          "Replacement Assets" means (1) non-current tangible assets that will
be used or useful in a business permitted by Section 7.07 or (2) all or
substantially all of the assets of a business permitted by Section 7.07 or a
majority of the voting Equity Interests of any Person engaged in a business
permitted by Section 7.07 that will become on the date of acquisition thereof a
Subsidiary.

          "Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than events for which the thirty (30) day notice period
has been waived.

          "Required Lenders" means, as of any date of determination, Lenders
having more than 50% of the aggregate Outstanding Amount of Term Loans;
provided, that any unused Commitments, and the portion of the aggregate
Outstanding Amount of the Term Loans held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders.

          "Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer or assistant treasurer of a Loan Party and,
as to any document delivered on the Closing Date, any vice president, secretary
or assistant secretary. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of

                                       27



such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

          "Restricted Payment" has the meaning specified in Section 7.06.

          "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

          "SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

          "Second Merger" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Senior Debt" means:

          (i) all Indebtedness of the Borrower Parties outstanding under the
     Credit Agreement (and the other Loan Documents (as defined therein)) and
     this Agreement and all Swap Contracts with respect thereto or hereto,
     whether outstanding on the date hereof or incurred thereafter;

          (ii) all other Indebtedness of the Borrower Parties that is not
     subordinated in right of payment to the Obligations hereunder (including,
     any guarantee related thereto); and

          (iii) all obligations with respect to the items listed in the
     preceding clauses (i) and (ii) (including any interest accruing after the
     commencement by or against any Loan Party of any proceedings under any Debt
     Relief Laws, whether or not such interest is an allowed claim under
     applicable law).

          "Senior Leverage Ratio" means, with respect to the Borrower Parties,
as of the end of any fiscal quarter of the Borrower Parties for the four (4)
fiscal quarter period ending on such date the ratio of (a) Consolidated Funded
Indebtedness (net of cash and Cash Equivalents on hand) which constitutes Senior
Debt of the Borrower Parties on a consolidated basis on the last day of such
period to (b) Consolidated EBITDA.

          "Senior Subordinated Notes" means the 8.00% unsecured senior
subordinated notes of the Borrower due 2013 in an aggregate principal amount of
$150,000,000 issued on the Closing Date, and any exchange notes issued in
exchange therefor, in each case, pursuant to the Senior Subordinated Notes
Indenture.

          "Senior Subordinated Notes Indenture" means the Indenture dated as of
the Closing Date between Wells Fargo Bank Minnesota, National Association, the
Borrower and the Guarantors, together with all instruments and other agreements
in connection therewith, as may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof, but only to the extent
permitted under the terms of the Loan Documents.

                                       28



          "Solvent" and "Solvency" mean, with respect to any Person on any date
of determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

          "SPC" has the meaning specified in Section 10.07(g).

          "Sponsor" means Thomas H. Lee Partners, L.P. and its Affiliates.

          "Sponsor Management Agreement" means the Management Agreement dated
the Closing Date between THL Managers V, LLC and the Borrower, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, but only to the extent permitted under the terms of the Loan
Documents.

          "Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.

          "Subsidiary Guarantor" means, collectively, the Subsidiaries of the
Borrower that are Guarantors.

          "Subsidiary Guaranty" means, collectively, the Subsidiary Guaranty
made by the Subsidiary Guarantors in favor of the Administrative Agent on behalf
of the Lenders, substantially in the form of Exhibit E-2, together with each
other guaranty and guaranty supplement delivered pursuant to Section 6.12.

          "Supplemental Administrative Agent" has the meaning specified in
Section 9.13 and "Supplemental Administrative Agents" shall have the
corresponding meaning.

          "Surviving Corporation" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Swap Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or

                                       29



bond index swaps or options or forward bond or forward bond price or forward
bond index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, spot contracts, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a "Master Agreement"), including any such
obligations or liabilities under any Master Agreement.

          "Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

          "Synthetic Lease Obligation" means the monetary obligation of a Person
under a so-called synthetic, off-balance sheet or tax retention lease.

          "Target Company" has the meaning specified in the Preliminary
Statements to this Agreement.

          "Taxes" has the meaning specified in Section 3.01(a).

          "Term Facility" means, at any time, (a) prior to the initial advance
of the Term Loans, the aggregate Commitments of all Lenders at such time, and
(b) thereafter, the aggregate Term Loans of all Lenders at such time.

          "Term Loan" means an advance made by any Lender under the Term
Facility.

          "Threshold Amount" means $15,000,000.

          "Transaction" means, collectively, (a) the Equity Contributions, (b)
the Acquisition, the First Merger and the Second Merger, (c) the refinancing of,
and termination of all commitments with respect to, the Existing Credit
Agreement and the other outstanding Indebtedness of the Target Company, MFI and
their respective Subsidiaries, including, without limitation, the Existing Notes
tendered upon consummation of the Existing Notes Tender Offer, except for
Indebtedness under the Credit Agreement, the Senior Subordinated Notes Indenture
and this Agreement, and the Existing Indebtedness to remain outstanding after
the Closing Date, (d) the issuance and sale of the Senior Subordinated Notes,
(e) the funding of the Term Loans, (f) the consummation of any other
transactions in connection with the foregoing, and (g) the payment of the fees
and expenses incurred in connection with any of the foregoing.

                                       30



          "Type" means, with respect to a Term Loan, its character as a Base
Rate Loan or a Eurodollar Rate Loan.

          "2003 Fourth Quarter" has the meaning set forth in Section 1.03(c).

          "Uniform Commercial Code" means the Uniform Commercial Code as the
same may from time to time be in effect in the State of New York or the Uniform
Commercial Code (or similar code or statute) of another jurisdiction, as
applicable.

          "United States" and "U.S." mean the United States of America.

          "U.S. Lender" has the meaning set forth in Section 10.15(b).

          "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.

          1.02 Other Interpretive Provisions. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

          (a) The meanings of defined terms are equally applicable to the
     singular and plural forms of the defined terms.

          (b) (i) The words "herein," "hereto," "hereof" and "hereunder" and
     words of similar import when used in any Loan Document shall refer to such
     Loan Document as a whole and not to any particular provision thereof.

          (ii) Article, Section, Exhibit and Schedule references are to the Loan
     Document in which such reference appears.

          (iii) The term "including" is by way of example and not limitation.

          (iv) The term "documents" includes any and all instruments, documents,
     agreements, certificates, notices, reports, financial statements and other
     writings, however evidenced, whether in physical or electronic form.

          (c) In the computation of periods of time from a specified date to a
     later specified date, the word "from" means "from and including;" the words
     "to" and "until" each mean "to but excluding;" and the word "through" means
     "to and including."

          (d) Section headings herein and in the other Loan Documents are
     included for convenience of reference only and shall not affect the
     interpretation of this Agreement or any other Loan Document.

                                       31



          1.03 Accounting Terms. (a) All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

          (b) If at any time any change in GAAP would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either
the Borrower or the Required Lenders shall so request, the Administrative Agent
and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided, that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders a written reconciliation in
form and substance reasonably satisfactory to the Administrative Agent, between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP.

          (c) With respect to the time period commencing October 1, 2003 and
ending on December 31, 2003 (the "2003 Fourth Quarter"), and notwithstanding the
actual accounting periods for which any financial statements were prepared for
the 2003 Fourth Quarter, the 2003 Fourth Quarter shall be deemed to constitute
one accounting period and each of Consolidated Net Income and Consolidated
EBITDA shall be calculated with all applicable financing statements prepared for
the 2003 Fourth Quarter taken as a whole.

          1.04 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

          1.05 References to Agreements and Laws. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are permitted by
any Loan Document; and (b) references to any Law shall include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

          1.06 Times of Day. Unless otherwise specified, all references herein
to times of day shall be references to Eastern time (daylight or standard, as
applicable).

          1.07 Timing of Payment or Performance. When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance is required on a day which is not a Business Day, the date
of such payment (other than as described

                                       32



in the definition of Interest Period) or performance shall extent to the
immediately succeeding Business Day.

          1.08 Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Articles II, IX and X) or any of the other Loan
Documents to be in Dollars shall also include the equivalent of such amount in
any currency other than Dollars, such equivalent amount to be determined at the
rate of exchange quoted by Bank of America in Charlotte, North Carolina at the
close of business on the Business Day immediately preceding any date of
determination thereof, to prime banks in New York, New York for the spot
purchase in the New York foreign exchange market of such amount in Dollars with
such other currency.

                                   ARTICLE II
                         THE COMMITMENTS AND TERM LOANS

          2.01 The Term Loans. Subject to the terms and conditions set forth
herein, each Lender severally agrees to make, on the Closing Date, a single loan
(consisting of a Term Loan) in an amount equal to its Pro Rata Share of the Term
Facility to the Borrower. The Borrowing shall consist of Term Loans made
simultaneously by the Lenders in accordance with their respective Pro Rata
Shares. Amounts borrowed under this Section 2.01 and repaid or prepaid may not
be reborrowed. Term Loans may be Base Rate Loans or Eurodollar Rate Loans, as
further provided herein.

          2.02 Borrowing, Conversions and Continuations of Term Loans. (a) The
Borrowing, each conversion of Term Loans from one Type to the other, and each
continuation of Eurodollar Rate Loans shall be made upon the Borrower's
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
12:30 p.m. (Charlotte, North Carolina time) (i) three (3) Business Days prior to
the requested date of the Borrowing of Eurodollar Rate Loans, or any
continuation of Eurodollar Rate Loans or any conversion of Base Rate Loans to
Eurodollar Rate Loans, and (ii) one (1) Business Day before the requested date
of the Borrowing of Base Rate Loans. Each telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Committed Loan Notice, appropriately completed
and signed by a Responsible Officer of the Borrower. The Borrowing of, and each
conversion to or continuation of Eurodollar Rate Loans shall be in a principal
amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof. The
Borrowing of or each conversion to Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each
Committed Loan Notice (whether telephonic or written) shall specify (i) whether
the Borrower is requesting the Borrowing, a conversion of Term Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing (which shall be the Closing Date), conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Term Loans to be borrowed, converted or continued, (iv) the
Type of Term Loans to be borrowed or to which existing Term Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto. If the Borrower fails to specify a Type of Term Loan in a
Committed Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the Term Loans shall be made as,
or converted to, Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of

                                       33



the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans. If the Borrower requests the Borrowing of, a conversion to, or a
continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but
fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one (1) month.

          (b) Following receipt of a Committed Loan Notice, the Administrative
Agent shall promptly notify each Lender of the amount of its Pro Rata Share of
the Term Loans, and if no timely notice of a conversion or continuation is
provided by the Borrower, the Administrative Agent shall notify each Lender of
the details of any automatic conversion to Base Rate Loans described in Section
2.02(a). In the case of the Borrowing, each Lender shall make the amount of its
Term Loan available to the Administrative Agent in immediately available funds
at the Administrative Agent's Office not later than 1:00 p.m. on the Business
Day specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Article IV, the Administrative Agent shall
make all funds so received available to the Borrower in like funds as received
by the Administrative Agent either by (i) crediting the account of the Borrower
on the books of Bank of America with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided to
(and reasonably acceptable to) the Administrative Agent by the Borrower.

          (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan unless the Borrower pays the amount in Section 3.05 in
connection therewith. During the existence of an Event of Default, no Term Loans
may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Required Lenders.

          (d) The Administrative Agent shall promptly notify the Borrower and
the Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate. The
determination of the Eurodollar Rate by the Administrative Agent shall be
conclusive in the absence of manifest error. At any time that Base Rate Loans
are outstanding, the Administrative Agent shall notify the Borrower and the
Lenders of any change in Bank of America's prime rate used in determining the
Base Rate promptly following the public announcement of such change.

          (e) After giving effect to the Borrowing, all conversions of Term
Loans from one Type to the other, and all continuations of Term Loans as the
same Type, there shall not be more than ten (10) Interest Periods in effect.

          (f) The failure of any Lender to make the Term Loan to be made by it
as part of the Borrowing hereunder shall not relieve any other Lender of its
obligation, hereunder to make its Term Loan on the date of such Borrowing, but
no Lender shall be responsible for the failure of any other Lender to make the
Term Loan to be made by such other Lender on the date of the Borrowing.

          2.03 Prepayments. (a) Optional. (i) The Borrower may, upon notice to
the Administrative Agent, at any time or from time to time voluntarily prepay
the Term Loans in whole or in part; provided, that to the extent the Borrower
makes a voluntary prepayment of any Term Loans within three (3) years after the
Closing Date, such prepayment shall be made with a

                                       34



premium such that the aggregate amount of such voluntary prepayment shall be in
an amount equal to (1) 103% of the principal amount prepaid if such voluntary
prepayment is made within one (1) year after the Closing Date, (2) 102% of the
principal amount prepaid if such voluntary prepayment is made within two (2)
years after the Closing Date, and (3) 101% of the principal amount prepaid if
such voluntary prepayment is made within three (3) years after the Closing Date.
The prepayment of any Term Loans after the third anniversary of the Closing Date
shall be made without premium or penalty. Any notice of prepayment must be
received by the Administrative Agent not later than 12:30 p.m. (Charlotte, North
Caroline time) (A) three (3) Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (2)
any prepayment of Eurodollar Rate Loans shall be in a principal amount of
$2,000,000 or a whole multiple of $500,000 in excess thereof; and (3) any
prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Term Loans to be
prepaid. The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender's Pro Rata Share
of such prepayment. If such notice is given by the Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest thereon, together with
any additional amounts required pursuant to Section 3.05. Any prepayment of a
Base Rate Loan shall be accompanied by all accrued interest thereon.

          (ii) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower may rescind any notice of prepayment under Section
2.03(a) above if such prepayment would have resulted from a refinancing of the
total amount of the Term Facility, which refinancing shall not be consummated or
shall otherwise be delayed.

          (b) Mandatory. (i) Within ten (10) Business Days after the occurrence
of a Change of Control, the Borrower shall prepay any and all outstanding Term
Loans with a premium such that the aggregate amount of such prepayment shall be
in an amount equal to 101% of the unpaid principal amount of the Term Loans.

          (ii) If Holdings or any of its Subsidiaries conducts an Asset Sale
which, after giving effect to Section 7.05 hereof, gives rise to any Excess
Proceeds, the Borrower shall give written notice to the Administrative Agent
thereof on or prior to the date on which the Borrower shall be required to
prepay the Term Loans from such Excess Proceeds and shall prepay an aggregate
principal amount of Term Loans in an amount as indicated in Section 7.05 within
two (2) Business Days of receipt thereof by Holdings or such Subsidiary;
provided, that to the extent the Borrower makes such a mandatory prepayment of
any Term Loans within three (3) years after the Closing Date, such prepayment
shall be made with a premium such that the aggregate amount of such mandatory
prepayment shall be in an amount equal to (1) 103% of the principal amount
prepaid if such mandatory prepayment is made within one (1) year after the
Closing Date, (2) 102% of the principal amount prepaid if such mandatory
prepayment is made within two (2) years after the Closing Date, and (3) 101% of
the principal amount prepaid if such mandatory prepayment is made within three
(3) years after the Closing Date . The prepayment of any Term Loans after the
third anniversary of the Closing Date shall be made without premium or penalty.

                                       35



          (iii) Funding Losses, Etc. All prepayments under this Section 2.03
shall be made together with, in the case of any such prepayment of a Eurodollar
Rate Loan on a date other than the last day of an Interest Period therefor, any
amounts owing in respect of such Eurodollar Rate Loan pursuant to Section 3.05.
Notwithstanding any of the other provisions of Section 2.03(b), so long as no
Event of Default shall have occurred and be continuing, if any prepayment of
Eurodollar Rate Loans is required to be made under this Section 2.03(b), other
than on the last day of the Interest Period therefor, the Borrower may, in its
sole discretion, deposit the amount of any such prepayment otherwise required to
be made thereunder into a cash collateral account until the last day of such
Interest Period, at which time the Administrative Agent shall be authorized
(without any further action by or notice to or from the Borrower or any other
Loan Party) to apply such amount to the prepayment of the Term Loans in
accordance with this Section 2.03(b). Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent shall also be
authorized (without any further action by or notice to or from the Borrower or
any other Loan Party) to apply such amount to the prepayment of the outstanding
Term Loans in accordance with this Section 2.03(b).

          2.04 Repayment of Term Loans. The Borrower shall repay to the
Administrative Agent on the Maturity Date for the ratable account of the Lenders
the aggregate principal amount of all Term Loans outstanding on such date.

          2.05 Interest. (a) Subject to the provisions of Section 2.05(b), (i)
each Eurodollar Rate Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to the
Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each
Base Rate Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Rate.

          (b) While any Event of Default set forth in Section 8.01(a) or (f)
exists, the Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
applicable Laws. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.

          (c) Interest on each Term Loan shall be due and payable in arrears on
each Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

          2.06 Fees. The Borrower shall pay to the Agents such fees as shall
have been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

          2.07 Computation of Interest and Fees. All computations of interest
for Base Rate Loans, when the Base Rate is determined by Bank of America's
"prime rate", shall be made on the basis of a year of three hundred and
sixty-five (365) or three hundred and sixty-six (366) days, as the case may be,
and actual days elapsed. All other computations of fees and interest

                                       36



shall be made on the basis of a three hundred and sixty (360) day year and
actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a three hundred and sixty-five (365)
day year). Interest shall accrue on each Term Loan for the day on which the Term
Loan is made, and shall not accrue on a Term Loan, or any portion thereof, for
the day on which the Term Loan or such portion is paid, provided, that any Term
Loan that is repaid on the same day on which it is made shall, subject to
Section 2.09(a), bear interest for one (1) day. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

          2.08 Evidence of Indebtedness. (a) The Borrowing made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and evidenced by one or more entries in the Register maintained by the
Administrative Agent, acting solely for purposes of Treasury Regulation Section
5f.103-1(c), as agent for the Borrower, in each case in the ordinary course of
business. The accounts or records maintained by the Administrative Agent and
each Lender shall be prima facie evidence absent manifest error of the amount of
the Borrowing made by the Lenders to the Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and
records of the Administrative Agent in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error. Upon the request of any Lender made through the Administrative Agent, the
Borrower shall execute and deliver to such Lender (through the Administrative
Agent) a Note payable to such Lender, which shall evidence such Lender's Term
Loans in addition to such accounts or records. Each Lender may attach schedules
to its Note and endorse thereon the date, Type (if applicable), amount and
maturity of its Term Loans and payments with respect thereto.

          (b) In the event of any conflict between the accounts and records
maintained by the Administrative Agent and the accounts and records of any
Lender in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error.

          (c) Entries made in good faith by the Administrative Agent in the
Register pursuant to Section 2.08(a), and by each Lender in its account or
accounts pursuant to Section 2.08(a), shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement and the other
Loan Documents, absent manifest error; provided, that the failure of the
Administrative Agent or such Lender to make an entry, or any finding that an
entry is incorrect, in the Register or such account or accounts shall not limit
or otherwise affect the obligations of the Borrower under this Agreement and the
other Loan Documents.

          2.09 Payments Generally. (a) All payments to be made by the Borrower
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all
payments by the Borrower hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the
Administrative Agent's Office in Dollars and in immediately available

                                       37



funds not later than 2:00 p.m. on the date specified herein. The Administrative
Agent will promptly distribute to each Lender its Pro Rata Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender's Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

          (b) If any payment to be made by the Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Loans to be made in the
next succeeding calendar month, such payment shall be made on the immediately
preceding Business Day.

          (c) Unless the Borrower or any Lender has notified the Administrative
Agent, prior to the date any payment is required to be made by it to the
Administrative Agent hereunder, that the Borrower or such Lender, as the case
may be, will not make such payment, the Administrative Agent may assume that the
Borrower or such Lender, as the case may be, has timely made such payment and
may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to the Administrative Agent in immediately
available funds, then:

          (i) if the Borrower failed to make such payment, each Lender shall
     forthwith on demand repay to the Administrative Agent the portion of such
     assumed payment that was made available to such Lender in immediately
     available funds, together with interest thereon in respect of each day from
     and including the date such amount was made available by the Administrative
     Agent to such Lender to the date such amount is repaid to the
     Administrative Agent in immediately available funds at the Federal Funds
     Rate from time to time in effect; and

          (ii) if any Lender failed to make such payment, such Lender shall
     forthwith on demand pay to the Administrative Agent the amount thereof in
     immediately available funds, together with interest thereon for the period
     from the date such amount was made available by the Administrative Agent to
     the Borrower to the date such amount is recovered by the Administrative
     Agent (the "Compensation Period") at a rate per annum equal to the Federal
     Funds Rate from time to time in effect. When such Lender makes payment to
     the Administrative Agent (together with all accrued interest thereon), then
     such payment amount (excluding the amount of any interest which may have
     accrued and been paid in respect of such late payment) shall constitute
     such Lender's Term Loan included in the Borrowing. If such Lender does not
     pay such amount forthwith upon the Administrative Agent's demand therefor,
     the Administrative Agent may make a demand therefor upon the Borrower, and
     the Borrower shall pay such amount to the Administrative Agent, together
     with interest thereon for the Compensation Period at a rate per annum equal
     to the rate of interest applicable to the Borrowing. Nothing herein shall
     be deemed to relieve any Lender from its obligation to fulfill its
     Commitment or to prejudice any rights which the Administrative Agent or the
     Borrower may have against any Lender as a result of any default by such
     Lender hereunder.

                                       38



          A notice of the Administrative Agent to any Lender or the Borrower
with respect to any amount owing under this Section 2.09(c) shall be conclusive,
absent manifest error.

          (d) If any Lender makes available to the Administrative Agent funds
for any Term Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the
Borrower by the Administrative Agent because the conditions to the Borrowing set
forth in Article IV are not satisfied or waived in accordance with the terms
hereof, the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.

          (e) The obligations of the Lenders hereunder to make Term Loans are
several and not joint. The failure of any Lender to make any Term Loan on any
date required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Term Loan.

          (f) Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Term Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Term Loan in any particular place or manner.

          (g) Whenever any payment received by the Administrative Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all amounts due and payable to the Administrative Agent and the Lenders under or
in respect of this Agreement and the other Loan Documents on any date, such
payment shall be distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the order of priority set forth in
Section 8.03. If the Administrative Agent receives funds for application to the
Obligations of the Loan Parties under or in respect of the Loan Documents under
circumstances for which the Loan Documents do not specify the manner in which
such funds are to be applied, the Administrative Agent may, but shall not be
obligated to, elect to distribute such funds to each of the Lenders in
accordance with such Lender's Pro Rata Share of the Outstanding Amount of all
Term Loans, in repayment or prepayment of such of the outstanding Term Loans or
other Obligations then owing to such Lender.

          2.10 Sharing of Payments. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Term Loans made by
it any payment (whether voluntary, involuntary, through the exercise of any
right of setoff, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Term Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment in respect of such Term Loans
pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender under any
of the circumstances described in Section 10.06 (including pursuant to any
settlement entered into by the purchasing Lender in its discretion), such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount

                                       39



paid or payable by the purchasing Lender in respect of the total amount so
recovered, without further interest thereon. The Borrower agrees that any Lender
so purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
setoff, but subject to Section 10.09) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation. The Administrative Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of participations
purchased under this Section 2.10 and will in each case notify the Lenders
following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section 2.10 shall from and after such purchase
have the right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.

                                   ARTICLE III
                 TAXES, INCREASED COST PROTECTION AND ILLEGALITY

          3.01 Taxes. (a) Except as provided in this Section 3.01, any and all
payments by the Borrower to or for the account of any Agent or any Lender under
any Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities
(including additions to tax, penalties and interest) with respect thereto,
excluding, in the case of each Agent and each Lender, taxes imposed on or
measured by its overall net income or overall gross income (including branch
profits), and franchise (and similar) taxes imposed on it in lieu of net income
taxes, by the jurisdiction (or any political subdivision thereof) under the Laws
of which such Agent or such Lender, as the case may be, is organized or
maintains a Lending Office, and all liabilities (including additions to tax,
penalties and interest) with respect thereto (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by any Laws to deduct any Taxes from or in respect of
any sum payable under any Loan Document to any Agent or any Lender, (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 3.01), each of such Agent and such Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within thirty (30) days after the date
of such payment, the Borrower shall furnish to such Agent or Lender (as the case
may be) the original or a certified copy of a receipt evidencing payment thereof
to the extent such a receipt is issued therefor, or other written proof of
payment thereof that is reasonably satisfactory to the Administrative Agent.

          (b) In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise, property,
intangible or mortgage recording taxes or charges or similar levies which arise
from any payment made under any Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Loan Document (hereinafter referred to as "Other Taxes").

                                       40



          (c) The Borrower agrees to indemnify each Agent and each Lender for
(i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section
3.01) paid by such Agent and such Lender, and (ii) any liability (including
additions to tax, penalties, interest and expenses) arising therefrom or with
respect thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority;
provided such Agent or Lender, as the case may be, provides the Borrower with a
written statement thereof setting forth in reasonable detail the basis and
calculation of such amounts. Payment under this Section 3.01(c) shall be made
within thirty (30) days after the date such Lender or such Agent makes a demand
therefor.

          (d) The Borrower shall not be required pursuant to this Section 3.01
to pay any additional amount to, or to indemnify, any Lender or Agent, as the
case may be, to the extent that such Lender or such Agent becomes subject to
Taxes subsequent to the Closing Date (or, if later, the date such Lender or
Agent becomes a party to this Agreement) as a result of a change in the place of
organization of such Lender or Agent or a change in the lending office of such
Lender, except to the extent that any such change is requested or required by
the Borrower (and provided, that nothing in this clause (d) shall be construed
as relieving the Borrower from any obligation to make such payments or
indemnification in the event of a change that is a change in Law).

          (e) If the forms provided by a Lender or an Agent pursuant to Section
10.15(a) at the time such Lender or such Agent, as the case may be, first
becomes a party to this Agreement indicate a United States withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender or Agent, as the case may be, provides
the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such forms; provided, however, that, if at the date of
the Assignment and Assumption pursuant to which a Lender becomes a party to this
Agreement, the Lender assignor was entitled to payments under clause (a) of this
Section 3.01 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender assignee on such date.

          (f) If any Lender or Agent determines that it has received a refund in
respect of any Taxes or Other Taxes as to which indemnification or additional
amounts have been paid to it by the Borrower pursuant to this Section 3.01, it
shall promptly remit such refund (including any interest included in such
refund) to the Borrower (to the extent that it determines that it can do so
without prejudice to the retention of the refund), net of all out-of-pocket
expenses of the Lender or Agent, as the case may be; provided, however, that the
Borrower, upon the request of the Lender or Agent, as the case may be, agrees
promptly to return such refund to such party in the event such party is required
to repay such refund to the relevant taxing authority. Such Lender or Agent, as
the case may be, shall, at the Borrower's request, provide the Borrower with a
copy of any notice of assessment or other evidence of the requirement to repay
such refund received from the relevant taxing authority (provided, that, such
Lender or Agent may delete any information therein that such Lender or Agent
deems confidential). Nothing herein contained

                                       41



shall interfere with the right of a Lender or Agent to arrange its tax affairs
in whatever manner it thinks fit nor oblige any Lender or Agent to claim any tax
refund or to disclose any information relating to its tax affairs or any
computations in respect thereof or require any Lender or Agent to do anything
that would prejudice its ability to benefit from any other refunds, credits,
reliefs, remissions or repayments to which it may be entitled.

          (g) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 3.01(a) or (c) with respect to such Lender it
will, if requested by the Borrower, use commercially reasonable efforts (subject
to such Lender's overall internal policies of general application and legal and
regulatory restrictions) to avoid the consequences of such event, including to
designate another Lending Office for any Term Loan affected by such event;
provided, that such efforts are made on terms that, in the reasonable judgment
of such Lender, cause such Lender and its Lending Office(s) to suffer no
material economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section 3.01(g) shall affect or postpone any of the Obligations
of the Borrower or the rights of such Lender pursuant to Sections 3.01(a) and
(c).

          3.02 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through
the Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrower shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.
Upon any such prepayment or conversion, the Borrower shall also pay accrued
interest on the amount so prepaid or converted. Each Lender agrees to designate
a different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.

          3.03 Inability to Determine Rates. If the Required Lenders determine
that for any reason adequate and reasonable means do not exist for determining
the Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Term Loan, or that
Dollar deposits are not being offered to banks in the London interbank
eurodollar market for the applicable amount and the Interest Period of such
Eurodollar Rate Loan, the Administrative Agent will promptly so notify the
Borrower and each Lender. Thereafter, the obligation of the Lenders to make or
maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent
(upon the instruction of the Required Lenders) revokes such notice. Upon receipt
of such notice, the Borrower may revoke any pending request for the Borrowing
of, or a

                                       42



conversion to or continuation of Eurodollar Rate Loans or, failing that, will be
deemed to have converted such request into a request for Base Rate Loans in the
amount specified therein.

          3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans. (a) If any Lender determines that as a result of the
introduction of or any change in or in the interpretation of any Law, in each
case after the date hereof, or such Lender's compliance therewith, there shall
be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this Section 3.04(a) any such increased costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
3.01 shall govern), (ii) changes in the basis of taxation of overall net income
or overall gross income (including branch profits), and franchise (and similar)
taxes imposed in lieu of net income taxes, by the United States or any foreign
jurisdiction or any political subdivision of either thereof under the Laws of
which such Lender is organized or maintains a Lending Office, and (iii) reserve
requirements contemplated by Section 3.04(c), then from time to time upon demand
of such Lender setting forth in reasonable detail such increased costs (with a
copy of such demand to the Administrative Agent given in accordance with Section
3.06), the Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such increased cost or reduction.

          (b) If any Lender determines that the introduction of any Law
regarding capital adequacy or any change therein or in the interpretation
thereof, in each case after the date hereof, or compliance by such Lender (or
its Lending Office) therewith, has the effect of reducing the rate of return on
the capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder (taking into consideration
its policies with respect to capital adequacy and such Lender's desired return
on capital), then from time to time upon demand of such Lender setting forth in
reasonable detail the charge and the calculation of such reduced rate of return
(with a copy of such demand to the Administrative Agent in accordance with
Section 3.06), the Borrower shall pay to such Lender such additional amounts as
will compensate such Lender for such reduction.

          (c) The Borrower shall pay to each Lender, as long as such Lender
shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), additional interest on the unpaid principal amount
of each Eurodollar Rate Loan equal to the actual costs of such reserves
allocated to such Term Loan by such Lender (as determined by such Lender in good
faith, which determination shall be conclusive in the absence of manifest
error), which shall be due and payable on each date on which interest is payable
on such Term Loan, provided the Borrower shall have received at least fifteen
(15) days' prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender. If a Lender fails to give notice fifteen
(15) days prior to the relevant Interest Payment Date, such additional interest
shall be due and payable fifteen (15) days from receipt of such notice.

          (d) The Borrower shall not be required to compensate a Lender pursuant
to Section 3.04(a) (b) or (c) for any such increased cost or reduction incurred
more than one hundred and eighty (180) days prior to the date that such Lender
demands, or notifies the Borrower of its intention to demand, compensation
therefor; provided, that, if the circumstance

                                       43



giving rise to such increased cost or reduction is retroactive, then such
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

          3.05 Funding Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

          (a) any continuation, conversion, payment or prepayment of any Term
     Loan other than a Base Rate Loan on a day other than the last day of the
     Interest Period for such Term Loan (whether voluntary, mandatory,
     automatic, by reason of acceleration, or otherwise); or

          (b) any failure by the Borrower (for a reason other than the failure
     of such Lender to make a Term Loan) to prepay, borrow, continue or convert
     any Term Loan other than a Base Rate Loan on the date or in the amount
     notified by the Borrower;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Term Loan or from fees payable to
terminate the deposits from which such funds were obtained.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Term Loan by a matching
deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan was in fact so funded.

          3.06 Matters Applicable to All Requests for Compensation. (a) A
certificate of any Agent or any Lender claiming compensation under this Article
III and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Agent or such Lender may use any reasonable averaging and
attribution methods.

          (b) With respect to any Lender's claim for compensation under Section
3.01, 3.02, 3.03 or 3.04, the Borrower shall not be required to compensate such
Lender for any amount incurred more than one hundred and eighty (180) days prior
to the date that such Lender notifies the Borrower of the event that gives rise
to such claim. If any Lender requests compensation by the Borrower under Section
3.04, the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender to make or continue
from one Interest Period to another Eurodollar Rate Loans, or to convert Base
Rate Loans into Eurodollar Rate Loans, until the event or condition giving rise
to such request ceases to be in effect (in which case the provisions of Section
3.06(c) shall be applicable); provided, that such suspension shall not affect
the right of such Lender to receive the compensation so requested.

          (c) If the obligation of any Lender to make or continue from one
Interest Period to another any Eurodollar Rate Loan, or to convert Base Rate
Loans into Eurodollar Rate Loans shall be suspended pursuant to Section 3.06(b)
hereof, such Lender's Eurodollar Rate Loans shall be automatically converted
into Base Rate Loans on the last day(s) of the then current Interest Period(s)
for such Eurodollar Rate Loans (or, in the case of an immediate

                                       44



conversion required by Section 3.02, on such earlier date as required by Law)
and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 3.01, 3.02, 3.03 or 3.04 hereof that gave
rise to such conversion no longer exist:

          (i) to the extent that such Lender's Eurodollar Rate Loans have been
     so converted, all payments and prepayments of principal that would
     otherwise be applied to such Lender's Eurodollar Rate Loans shall be
     applied instead to its Base Rate Loans; and

          (ii) all Term Loans that would otherwise be made or continued from one
     Interest Period to another by such Lender as Eurodollar Rate Loans shall be
     made or continued instead as Base Rate Loans, and all Base Rate Loans of
     such Lender that would otherwise be converted into Eurodollar Rate Loans
     shall remain as Base Rate Loans.

          (d) If any Lender gives notice to the Borrower (with a copy to the
Agent) that the circumstances specified in Section 3.01, 3.02, 3.03 or 3.04
hereof that gave rise to the conversion of such Lender's Eurodollar Rate Loans
pursuant to this Section 3.06 no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist) at a time when Eurodollar
Rate Loans made by other Lenders are outstanding, such Lender's Base Rate Loans
shall be automatically converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding Eurodollar Rate Loans, to the extent
necessary so that, after giving effect thereto, all Term Loans held by the
Lenders holding Eurodollar Rate Loans and by such Lender are held pro rata (as
to principal amounts, interest rate basis, and Interest Periods) in accordance
with their respective Commitments.

          3.07 Replacement of Lenders under Certain Circumstances. (a) If at any
time (i) the Borrower becomes obligated to pay additional amounts or indemnity
payments described in Section 3.01 or 3.04 as a result of any condition
described in such Sections or any Lender ceases to make Eurodollar Rate Loans as
a result of any condition described in Section 3.02 or 3.03, (ii) any Lender
becomes a Defaulting Lender or (iii) any Lender becomes a "Non-Consenting
Lender" (as defined below in this Section 3.07), then the Borrower may, on ten
(10) Business Days' prior written notice to the Administrative Agent and such
Lender, either (i) replace such Lender by causing such Lender to (and such
Lender shall be obligated to) assign pursuant to Section 10.07(b) (with the
assignment fee to be paid by the Borrower in such instance) all of its rights
and obligations under this Agreement to one or more Eligible Assignees,
provided, that neither the Administrative Agent nor any Lender shall have any
obligation to the Borrower to find a replacement Lender or other such Person or
(ii) terminate the Commitment of such Lender and repay all obligations of the
Borrower owing to such Lender relating to the Term Loans and participations held
by such Lender as of such termination date.

          (b) Any Lender being replaced pursuant to Section 3.07(a) above shall
(i) execute and deliver an Assignment and Assumption with respect to such
Lender's Commitment and outstanding Term Loans, and (ii) deliver any Notes
evidencing such Term Loans to the Borrower or Administrative Agent. Pursuant to
such Assignment and Assumption, (i) the assignee Lender shall acquire all or a
portion, as the case may be, of the assigning Lender's Commitment and
outstanding Term Loans, (ii) all obligations of the Borrower owing to the
assigning Lender relating to the Term Loans and participations so assigned shall
be paid in full by the assignee Lender to such assigning Lender concurrently
with such assignment and

                                       45



assumption and (iii) upon such payment and, if so requested by the assignee
Lender, delivery to the assignee Lender of the appropriate Note or Notes
executed by the Borrower, the assignee Lender shall become a Lender hereunder
and the assigning Lender shall cease to constitute a Lender hereunder with
respect to such assigned Term Loans, except with respect to indemnification
provisions under this Agreement, which shall survive as to such assigning
Lender.

          (c) In the event that (i) the Borrower or the Administrative Agent has
requested the Lenders to consent to a departure or waiver of any provisions of
the Loan Documents or to agree to any amendment thereto, (ii) the consent,
waiver or amendment in question requires the agreement of all affected Lenders
in accordance with the terms of Section 10.01 and (iii) the Required Lenders
have agreed to such consent, waiver or amendment, then any Lender who does not
agree to such consent, waiver or amendment shall be deemed a "Non-Consenting
Lender."

          3.08 Survival. All of the Borrower's obligations under this Article
III shall survive termination of the Commitments and repayment of all other
Obligations hereunder.

                                   ARTICLE IV
                     CONDITIONS PRECEDENT TO the term loans

          The obligation of each Lender to make its advance of Term Loans
hereunder is subject to satisfaction of the following conditions precedent:

          (a) The Administrative Agent's receipt of the following, each of which
     shall be originals or facsimiles (followed promptly by originals) unless
     otherwise specified, each properly executed by a Responsible Officer of the
     signing Loan Party, each in form and substance reasonably satisfactory to
     the Administrative Agent and its legal counsel:

               (i) executed counterparts of this Agreement and each Guaranty;

               (ii) a Note executed by the Borrower in favor of each Lender
          requesting a Note;

               (iii) such certificates of resolutions or other action,
          incumbency certificates and/or other certificates of Responsible
          Officers of each Loan Party as the Administrative Agent may require
          evidencing the identity, authority and capacity of each Responsible
          Officer thereof authorized to act as a Responsible Officer in
          connection with this Agreement and the other Loan Documents to which
          such Loan Party is a party or is to be a party;

               (iv) such documents and certifications as the Administrative
          Agent may reasonably require to evidence that each Loan Party is duly
          organized or formed, and that each of the Borrower and the Guarantors
          is validly existing, in good standing and qualified to engage in
          business in each jurisdiction where its ownership, lease or operation
          of properties or the conduct of its business requires such
          qualification, except to the extent that failure to be so qualified
          could not reasonably be expected to have a Material Adverse Effect;

                                       46



               (v) (A) an opinion of Weil, Gotshal & Manges LLP, counsel to the
          Loan Parties, addressed to each Agent and each Lender, as to the
          matters set forth in Exhibit F-1, and as to such other matters
          concerning the Loan Parties and the Loan Documents as the
          Administrative Agent shall reasonably request and (B) opinions of
          local counsel for the Loan Parties, addressed to each Agent and each
          Lender, as to the matters set forth in Exhibit F-2, and as to such
          other matters concerning the Loan Parties and the Loan Documents as
          the Administrative Agent shall reasonably request;

               (vi) a certificate signed by a Responsible Officer of the
          Borrower certifying that there has been no event or circumstance since
          December 31, 2002, that has had or could be reasonably expected to
          have, either individually or in the aggregate, a Material Adverse
          Effect;

               (vii) a certificate of the Responsible Officer of each of
          Holdings and the Borrower certifying that (A) the "Consolidated
          EBITDA" as defined in, and calculated in accordance with, the Existing
          Credit Agreement after giving Pro Forma Effect to the Dairy
          Disposition of the Borrower and its Subsidiaries for the twelve-month
          period ended September 30, 2003 was not less than $141,800,000, (B)
          the ratio of Consolidated Funded Indebtedness of the Borrower and its
          Subsidiaries at the Closing Date to the "Consolidated EBITDA" as
          defined in, and calculated in accordance with, the Existing Credit
          Agreement after giving Pro Forma Effect to the Dairy Disposition of
          the Borrower and its Subsidiaries for the twelve-month period ended on
          the last day of the fiscal quarter ended September 30, 2003, was not
          greater than 5.65:1, and (C) the pro forma financial statements
          delivered pursuant to Section 5.05(d) were prepared in good faith on
          the basis of the assumptions stated therein, which assumptions are
          fair in light of the then existing conditions;

               (viii) a certificate attesting to the Solvency of the Loan
          Parties (taken as a whole) after giving effect to the Transaction,
          from the Chief Financial Officer of the Borrower;

               (ix) the financial statements described in Sections 5.05(a), (b)
          and (d);

               (x) a certified copy of the Sponsor Management Agreement;

               (xi) evidence that all insurance required to be maintained
          pursuant to the Loan Documents has been obtained and is in effect;

               (xii) certified copies of the Merger Agreement, duly executed by
          the parties thereto, together with all agreements, instruments and
          other documents delivered in connection therewith as the
          Administrative Agent shall reasonably request;

               (xiii) (A) copies of certificates of merger or other confirmation
          reasonably satisfactory to the Lenders to be filed with the Secretary
          of State of the State of Delaware for each Merger, (B) confirmation
          from the Target Company

                                       47



          and the Company, or their respective counsel that such certificates
          are to be so filed immediately after such confirmation and (C) on the
          Closing Date, but after the consummation of the Transaction, certified
          copies of such certificates of the consummation of the First Merger
          and the Second Merger from the Secretary of State of the State of
          Delaware;

               (xiv) an assumption agreement in substantially the form of
          Exhibit G hereto (the "Assumption Agreement"), duly executed by the
          Surviving Corporation in connection with the Mergers;

               (xv) a Committed Loan Notice relating to the Borrowing; and

               (xvi) such other assurances, certificates, documents, consents or
          opinions as the Administrative Agent reasonably may require.

          (b) All fees and expenses required to be paid on or before the Closing
     Date shall have been paid in full in cash.

          (c) There shall exist no action, suit, investigation, litigation or
     proceeding affecting any Loan Party or any of its Subsidiaries pending or,
     to the knowledge of any Loan Party or any of its Subsidiaries, threatened
     before any Governmental Authority or arbitrator that could be reasonably
     likely to have a Material Adverse Effect.

          (d) All governmental authorizations and all material third party
     consents and approvals necessary in connection with the Transaction shall
     have been obtained (without the imposition of any conditions that are not
     reasonably acceptable to the Administrative Agent) and shall remain in
     effect; all applicable waiting periods in connection with the Transaction
     shall have expired without any action being taken by any Governmental
     Authority (including, without limitation, the expiration of the requisite
     waiting period under the Hart Scott-Rodino Antitrust Improvements Act of
     1975), and no Law shall be applicable in the reasonable judgment of the
     Administrative Agent, in each case that restrains, prevents or imposes
     materially adverse conditions upon the Transaction.

          (e) The information contained in the confidential information
     memorandum dated October 2003 and used by the Arrangers in connection with
     the syndication of the Commitments, as supplemented to the Closing Date and
     taken as a whole, shall be complete and correct in all material respects,
     and no changes, occurrences or developments shall have occurred, and no
     information shall have been received or discovered by the Administrative
     Agent that, either individually or in the aggregate, could reasonably be
     expected to (1) have (or have had) a material adverse effect on business,
     operations, assets, liabilities (actual or contingent), results of
     operations or condition (financial or otherwise) of the Consolidated
     Parties, taken as a whole, (2) adversely affect (or has adversely affected)
     the ability of the Borrower or any Guarantor to perform its obligations
     under any of the Loan Documents or (3) adversely affect (or has adversely
     affected) the rights and remedies of the Lenders under the applicable loan
     documentation.

          (f) The Merger Agreement shall be in full force and effect.

                                       48



          (g) Simultaneously with the Borrowing, the Equity Contributions,
     Acquisition and the First Merger shall be consummated in accordance with
     the terms of the Merger Agreement, without any waiver or amendment not
     reasonably satisfactory to the Administrative Agent, and in compliance with
     all applicable requirements of Law and, after giving effect to the
     Transaction, (i) at least 20% of the consolidated capitalization of
     Holdings shall be in the form of common Equity Interests and (ii) no less
     than 75% of such common Equity Interests shall have been contributed in
     cash (and not through any direct or indirect rollover of any direct or
     indirect Equity Interests in the Target Company).

          (h) Immediately following the First Merger, the Second Merger shall be
     consummated.

          (i) The Administrative Agent shall be reasonably be satisfied with (A)
     any amendments, modification and supplements to the Merger Agreement, and
     (B) all agreements, instruments and documents relating to each other aspect
     of the Transaction.

          (j) The Borrower shall (i) have received at least $150,000,000 in
     gross cash proceeds from the sale of the Senior Subordinated Notes and (ii)
     have an availability of at least $595,000,000 under the Credit Agreement.

          (k) The representations and warranties of the Borrower and each other
     Loan Party contained in Article V or any other Loan Document shall be true
     and correct in all material respects on and as of the date of the
     Borrowing, except to the extent that such representations and warranties
     specifically refer to an earlier date, in which case they shall be true and
     correct in all material respects as of such earlier date.

          (l) No Default shall exist, or would result from the proposed
     Borrowing or from the application of the proceeds therefrom.

          (m) The Administrative Agent shall have received a Committed Loan
     Notice in accordance with the requirements hereof.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

          Each of Holdings and the Borrower represents and warrants to the
Agents and the Lenders that:

          5.01 Existence, Qualification and Power; Compliance with Laws. Each
Loan Party and each of its Subsidiaries (a) is a Person duly organized or
formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, (b) has all requisite power and authority
to (i) own or lease its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents and the Merger
Agreement to which it is a party, (c) is duly qualified and in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, (d) is in
compliance with all Laws and (e) has all requisite governmental licenses,
authorizations, consents and approvals to operate its business as currently

                                       49



conducted; except in each case referred to in clause (c), (d) or (e), to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

          5.02 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document and the Merger Agreement to
which such Person is a party, and the consummation of the Transaction, are
within such Loan Party's corporate or other powers, have been duly authorized by
all necessary corporate or other organizational action, and do not and will not
(a) contravene the terms of any of such Person's Organization Documents, (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under (other than as permitted by Section 7.01), or require any payment
(except for Indebtedness to be repaid on the Closing Date in connection with the
Transaction) to be made under (i) any Contractual Obligation to which such
Person is a party or affecting such Person or the properties of such Person or
any of its Subsidiaries or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law; except with respect to any breach
or contravention or payment (but not creation of Liens) referred to in clause
(b)(i), to the extent that such conflict, breach, contravention or payment could
not reasonably be expected to have a Material Adverse Effect.

          5.03 Governmental Authorization; Other Consents. No material approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, or for the
consummation of the Transaction or (b) the exercise by the Administrative Agent
or any Lender of its rights under the Loan Documents, except for the approvals,
consents, exemptions, authorizations, actions, notices and filings which have
been duly obtained, taken, given or made and are in full force and effect and,
in the case of the Transactions, those approvals, consents, exemptions,
authorizations or other actions, notices or filings, the failure of which to
obtain or make could not reasonably be expected to have a Material Adverse
Effect. All applicable waiting periods in connection with the Transaction have
expired without any action having been taken by any Governmental Authority
restraining, preventing or imposing materially adverse conditions upon the
Transaction. The Acquisition and the Mergers have been consummated in accordance
with the Merger Agreement and, in all material respects, applicable Law.

          5.04 Binding Effect. This Agreement and each other Loan Document has
been duly executed and delivered by each Loan Party that is party thereto. This
Agreement and each other Loan Document constitutes, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium or
other laws affecting creditors' rights generally and by general principles of
equity.

          5.05 Financial Statements; No Material Adverse Effect. (a) The Audited
Financial Statements fairly present in all material respects the financial
condition of MFI and its consolidated Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein. During the period from December 31,

                                       50



2002 to and including the Closing Date, there has been (i) no sale, transfer or
other disposition by MFI or any of its consolidated Subsidiaries of any material
part of the business or property of MFI or any of its consolidated Subsidiaries,
taken as a whole, other than the Dairy Disposition and (ii) no purchase or other
acquisition by any of them of any business or property (including any Equity
Interests of any other Person) material in relation to the consolidated
financial condition of MFI or any of its consolidated Subsidiaries, taken as a
whole, in each case, which is not reflected in the foregoing financial
statements or in the notes thereto or has not otherwise been disclosed in
writing to the Lenders prior to the Closing Date.

          (b) The unaudited consolidated financial statements of MFI and its
consolidated Subsidiaries for the fiscal quarters ended March 31, 2003, June 30,
2003 and September 30, 2003, and the related consolidated statements of income
or operations, shareholders' equity and cash flows for such fiscal quarters (i)
were prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and meet the
requirements of Regulation S-X under the Securities Act of 1933, and all other
accounting rules and regulations of the SEC promulgated thereunder applicable to
a registration statement under such Act on Form S-1, and (ii) fairly present in
all material respects the financial condition of MFI and its Subsidiaries as of
the date thereof and their results of operations for the period covered thereby,
subject to the absence of footnotes and to normal year-end audit adjustments.
From such date to the Closing Date, except as set forth on Schedule 5.05,
Holdings, MFI and their respective Subsidiaries have not incurred any material
Indebtedness and other liabilities, direct or contingent, that, in accordance
with GAAP, would be required to be disclosed in such financial statements, other
than in connection with the Transactions and which are reflected in the pro
forma financial statements delivered pursuant to clause (d) below.

          (c) Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse Effect.

          (d) The (i) condensed consolidated pro forma balance sheet of MFI and
its Subsidiaries for the nine-month period ended September 30, 2003 and the
related consolidated pro forma statement of operations of MFI and its
Subsidiaries for the nine-month period then ended and (ii) the condensed
consolidated statement of operations of MFI and its Subsidiaries for the
twelve-month periods ended December 31, 2002 and September 30, 2003, certified
by the Chief Financial Officer of the Borrower, copies of which have been
furnished to each Lender, fairly present in all material respects the
consolidated pro forma financial condition of MFI and its Subsidiaries as at
such dates and the consolidated pro forma results of operations of MFI and its
Subsidiaries for the period ended on such date, in each case, giving pro forma
effect to the Transaction and the Dairy Disposition, all in accordance with GAAP
and meet the requirements of Regulation S-X under the Securities Act of 1933,
and all other accounting rules and regulations of the SEC promulgated thereunder
to a registration statement under such Act on Form S-1.

          (e) The consolidated forecasted balance sheets, statements of income
and statements of cash flows of MFI and its Subsidiaries delivered to the
Lenders pursuant to Article IV or this Section 5.05 were prepared in good faith
on the basis of the assumptions stated therein, which assumptions were
reasonable in light of the conditions existing at the time of delivery of

                                       51



such forecasts; it being understood that actual results may vary from such
forecasts and that such variations may be material.

          5.06 Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to this
Agreement, any other Loan Document or, as of the Closing Date, the consummation
of the Transaction, or (b) either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

          5.07 No Default. Neither the Borrower nor any Subsidiary is in default
under or with respect to, or a party to, any Contractual Obligation that could,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

          5.08 Ownership of Property; Liens. Each Loan Party and each of its
Subsidiaries has good record and indefeasible title in fee simple to, or valid
leasehold interests in, all real property necessary in the ordinary conduct of
its business, free and clear of all Liens except for minor defects in title that
do not materially interfere with its ability to conduct its business or to
utilize such assets for their intended purposes and Liens permitted by Section
7.01.

          5.09 Environmental Compliance. (a) There are no claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties that could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (b) Except as specifically disclosed in Schedule 5.09 or except as
could not reasonably be expected to have a Material Adverse Effect, (i) none of
the properties currently or formerly owned or operated by any Loan Party or any
of its Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any such
property; (ii) there are no and never have been any underground or aboveground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by any Loan Party or any of its
Subsidiaries or, to its knowledge, on any property formerly owned or operated by
any Loan Party or any of its Subsidiaries; (iii) there is no asbestos or
asbestos-containing material on any property currently owned or operated by any
Loan Party or any of its Subsidiaries; and (iv) Hazardous Materials have not
been released, discharged or disposed of on any property currently or formerly
owned or operated by any Loan Party or any of its Subsidiaries except for such
releases, discharges or disposal that were in material compliance with
Environmental Laws.

          (c) The properties do not contain any Hazardous Materials in amounts
or concentrations which (i) constitute, or constituted a violation of, (ii)
require remedial action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, remedial actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

                                       52



          (d) Except as specifically disclosed in Schedule 5.09, neither the
Borrower nor any of its Subsidiaries is undertaking, and has not completed,
either individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law except
for such investigation or assessment or remedial or response action that, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

          (e) All Hazardous Materials generated, used, treated, handled or
stored at, or transported to or from, any property currently or formerly owned
or operated by any Loan Party or any of its Subsidiaries have been disposed of
in a manner not reasonably expected to result in material liability to any Loan
Party or any of its Subsidiaries.

          5.10 Insurance. The properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies, in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Borrower and its Subsidiaries) with such deductibles and covering such risks as
are customarily carried by prudent companies engaged in similar businesses and
owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.

          5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal
and material state and other tax returns and reports required to be filed, and
have paid all Federal and material state and other taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those (a) which are not
overdue by more than thirty (30) days or (b) which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP or (c) with respect to which
the failure to make such filing or payment could not reasonably be expected to
have a Material Adverse Effect.

          5.12 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal or
state Laws. Each Plan that is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of the Borrower and Holdings, nothing has
occurred which would prevent, or cause the loss of, such qualification. Each
Loan Party and each ERISA Affiliate have made all required contributions to each
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.

          (b) There are no pending or, to the knowledge of the Borrower and
Holdings, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could be reasonably be expected to have
a Material Adverse Effect. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Effect.

                                       53



          (c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has an "accumulated funding deficiency" (as defined
in Section 412 of the Code), whether or not waived, and no application for a
waiver of the minimum funding standard has been filed with respect to any
Pension Plan; (iii) neither any Loan Party nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Loan Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither any Loan Party nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA, except, with respect to each of the foregoing clauses of this Section
5.12(c), as could not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.

          5.13 Subsidiaries; Equity Interests. As of the Closing Date, each Loan
Party has no Subsidiaries other than those specifically disclosed in Schedule
5.13, and all of the outstanding Equity Interests in such Subsidiaries have been
validly issued, are fully paid and non-assessable.

          5.14 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act. (a) The Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of purchasing
or carrying margin stock (within the meaning of Regulation U issued by the FRB),
or extending credit for the purpose of purchasing or carrying margin stock and
no proceeds of the Borrowings will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.

          (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940. Neither the making of any
Term Loan, nor the application of the proceeds or repayment thereof by the
Borrower, nor the consummation of the other transactions contemplated by the
Loan Documents, will violate any provision of any such Act or any rule,
regulation or order of the SEC thereunder.

          5.15 Disclosure. The Borrower has disclosed to the Agents and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries or any other Loan Party is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or
on behalf of any Loan Party to any Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or any other Loan Document (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 materially
misleading; provided, that, with respect to projected financial information, the
Borrower represents only that

                                       54



such information was prepared in good faith based upon assumptions believed to
be reasonable at the time of preparation; it being understood that such
projections may vary from actual results and that such variances may be
material.

          5.16 Compliance with Laws. Each Loan Party and its Subsidiaries is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

          5.17 Intellectual Property; Licenses, Etc. Each Loan Party and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, "IP Rights") that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person, except to the extent such
conflicts, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. To the knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by any Loan
Party or any Subsidiary infringes upon any rights held by any other Person
except for such infringements, individually or in the aggregate, which could not
reasonably be expected to have a Material Adverse Effect. No claim or litigation
regarding any of the foregoing is pending or, to the knowledge of the Borrower,
threatened, which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

          5.18 Solvency. The Loan Parties, on a consolidated basis, are Solvent.

          5.19 Tax Shelter Regulations. The Borrower does not intend to treat
the Term Loans and related transactions as being a "reportable transaction"
(within the meaning of Treasury Regulation Section 1.6011-4). In the event the
Borrower determines to take any action inconsistent with such intention, it will
promptly notify the Administrative Agent thereof. If the Borrower so notifies
the Administrative Agent, the Borrower acknowledges that one or more of the
Lenders may treat its Term Loans as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such Treasury
Regulation.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder, any Term
Loan or other Obligation hereunder which is accrued and payable shall remain
unpaid or unsatisfied, each of Holdings and the Borrower shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02 and 6.03)
cause each Subsidiary to:

                                       55



          6.01 Financial Statements. Deliver to the Administrative Agent for
further distribution to each Lender, in form and detail reasonably satisfactory
to the Administrative Agent:

          (a) as soon as available, but in any event within ninety (90) days
     after the end of each fiscal year of the Borrower, a consolidated balance
     sheet of the Borrower and its Subsidiaries as at the end of such fiscal
     year, and the related consolidated statements of income or operations,
     shareholders' equity and cash flows for such fiscal year, setting forth in
     each case in comparative form the figures for the previous fiscal year, all
     in reasonable detail and prepared in accordance with GAAP, audited and
     accompanied by a report and opinion of PricewaterhouseCoopers or any other
     independent certified public accountant of nationally recognized standing,
     which report and opinion shall be prepared in accordance with generally
     accepted auditing standards and shall not be subject to any "going concern"
     or like qualification or exception or any qualification or exception as to
     the scope of such audit;

          (b) as soon as available, but in any event within forty-five (45) days
     after the end of each of the first three (3) fiscal quarters of each fiscal
     year of the Borrower, a consolidated balance sheet of the Borrower and its
     Subsidiaries as at the end of such fiscal quarter, and the related
     consolidated statements of income or operations, shareholders' equity and
     cash flows for such fiscal quarter and for the portion of the fiscal year
     then ended, setting forth in each case in comparative form the figures for
     the corresponding fiscal quarter of the previous fiscal year and the
     corresponding portion of the previous fiscal year, all in reasonable detail
     and certified by a Responsible Officer of the Borrower as fairly presenting
     in all material respects the financial condition, results of operations,
     shareholders' equity and cash flows of the Borrower and its Subsidiaries in
     accordance with GAAP, subject only to normal year-end audit adjustments and
     the absence of footnotes;

          (c) at the time of delivery of the financial statements provided for
     in Sections 6.01(a) and (b) above, divisional income statements for the egg
     products division, the potato products division and the refrigerated
     distribution division prepared in accordance with past practices; and

          (d) as soon as available, but in any event no later than forty-five
     (45) days after the end of each fiscal year, forecasts prepared by
     management of the Borrower, in form reasonably satisfactory to the
     Administrative Agent, of consolidated balance sheets, income statements and
     cash flow statements of the Borrower and its Subsidiaries on a quarterly
     basis for the remaining portion of the fiscal year following such fiscal
     year then ended.

          6.02 Certificates; Other Information. Deliver to the Administrative
Agent for further distribution to each Lender, in form and detail reasonably
satisfactory to the Administrative Agent and the Required Lenders:

                                       56



          (a) no later than five (5) days after the delivery of the financial
     statements referred to in Section 6.01(a), a certificate of its independent
     certified public accountants certifying such financial statements;

          (b) no later than five (5) days after the delivery of the financial
     statements referred to in Sections 6.01(a) and (b), a duly completed
     Compliance Certificate signed by a Responsible Officer of the Borrower;

          (c) promptly after the same are available, copies of each annual
     report, proxy or financial statement or other report or communication sent
     to the stockholders of the Borrower, and copies of all annual, regular,
     periodic and special reports and registration statements which the Borrower
     may file or be required to file, copies of any report, filing or
     communication with the SEC under Section 13 or 15(d) of the Securities
     Exchange Act of 1934, or with any Governmental Authority that may be
     substituted therefor, or with any national securities exchange, and in any
     case not otherwise required to be delivered to the Administrative Agent
     pursuant hereto;

          (d) promptly after the furnishing thereof, copies of any requests or
     notices received by any Loan Party (other than in the ordinary course of
     business), statement or report furnished to any holder of debt securities
     of any Loan Party or of any of its Subsidiaries pursuant to the terms of
     any Junior Financing Documentation in a principal amount greater than the
     Threshold Amount and not otherwise required to be furnished to the Lenders
     pursuant to any other clause of this Section 6.02;

          (e) promptly after the receipt thereof by any Loan Party or any of its
     Subsidiaries, copies of each notice or other correspondence received from
     the SEC (or comparable agency in any applicable non-U.S. jurisdiction)
     concerning any material investigation or other material inquiry by such
     agency regarding financial or other operational results of any Loan Party
     or any of its Subsidiaries;

          (f) promptly after the assertion or occurrence thereof, notice of any
     environmental action against or of any noncompliance by any Loan Party or
     any of its Subsidiaries with any Environmental Law or Environmental Permit
     that could reasonably be expected to have a Material Adverse Effect;

          (g) promptly after the Borrower has notified the Administrative Agent
     of any intention by the Borrower to treat the Term Loans and related
     transactions as being a "reportable transaction" (within the meaning of
     Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form
     8886 or any successor form;

          (h) promptly, after the furnishing thereof, copies of all financial
     statements, forecasts, budgets or other similar information of Holdings
     furnished to the lenders or holders of any Permitted Holdco Debt; and

          (i) promptly, such additional information regarding the business,
     legal, financial or corporate affairs of any Loan Party or any Subsidiary,
     or compliance with the terms of the Loan Documents, as the Administrative
     Agent or any Lender may from time to time reasonably request.

                                       57



          Documents required to be delivered pursuant to Section 6.01(a) or (b)
or Section 6.02(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower's
website on the Internet at the website address listed on Schedule 10.02; or (ii)
on which such documents are posted on the Borrower's behalf on
IntraLinks/IntraAgency or another relevant website, if any, to which each Lender
and the Administrative Agent have access (whether a commercial, third-party
website or whether sponsored by the Administrative Agent); provided, that: (i)
the Borrower shall deliver paper copies of such documents to the Administrative
Agent for further distribution to each Lender until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and
(ii) the Borrower shall notify (which may be by facsimile or electronic mail)
the Administrative Agent of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents. Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(b) to the Administrative Agent. Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

          6.03 Notices. Promptly notify the Administrative Agent and each
Lender:


          (a) of the occurrence of any Default; and

          (b) of any matter that has resulted or could reasonably be expected to
     result in a Material Adverse Effect, including arising out of or resulting
     from (i) breach or non-performance of, or any default under, a Contractual
     Obligation of any Loan Party or any Subsidiary, (ii) any dispute,
     litigation, investigation, proceeding or suspension between any Loan Party
     or any Subsidiary and any Governmental Authority (including in connection
     with any Food Industry Laws), (iii) the commencement of, or any material
     development in, any litigation or proceeding affecting any Loan Party or
     any Subsidiary, including pursuant to any applicable Environmental Laws and
     or in respect of IP Rights, or (iv) the occurrence of any ERISA Event.

          Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to Section
6.03(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.

          6.04 Payment of Obligations. Pay, discharge or otherwise satisfy as
the same shall become due and payable, all its obligations and liabilities,
including (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or such

                                       58



Subsidiary; (b) all lawful claims which, if unpaid, would by Law become a Lien
upon its property; and (c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness except, in each case, to the extent the failure to
pay or discharge the same could not reasonably be expected to have a Material
Adverse Effect.

          6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain
in full force and effect its legal existence under the Laws of the jurisdiction
of its organization except in a transaction permitted by Section 7.04 or 7.05;
provided, however, that the Borrower and its Subsidiaries may consummate the
Acquisition and the Mergers, (b) take all reasonable action to maintain all
rights, privileges (including its good standing), permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect, and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

          6.06 Maintenance of Properties. (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order, repair and condition, ordinary wear and tear
excepted and casualty or condemnation excepted, and (b) make all necessary
renewals, replacements, modifications, improvements, upgrades, extensions and
additions thereof or thereto in accordance with prudent industry practice.

          6.07 Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Borrower and its Subsidiaries) as are customarily carried under similar
circumstances by such other Persons.

          6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except if the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

          6.09 Books and Records. Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower or such Subsidiary, as the case may be.

          6.10 Inspection Rights. Permit representatives and independent
contractors of the Administrative Agent and each Lender to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, and independent public accountants, all at the expense of the Lenders
and at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
that, excluding

                                       59



any such visits and inspections during the continuation of an Event of Default,
only the Administrative Agent on behalf of the Lenders may exercise rights under
this Section 6.10 and the Administrative Agent shall not exercise such rights
more often than two (2) times during any calendar year absent the existence of
an Event of Default and only one (1) such time shall be at the Borrower's
expense; provided, further that when an Event of Default exists the
Administrative Agent (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and without advance notice. The Administrative
Agent and the Lenders shall give the Borrower the opportunity to participate in
any discussions with the Borrower's accountants.

          6.11 Use of Proceeds. Use the proceeds of the Borrowing as
contemplated by the Preliminary Statements hereto.

          6.12 Covenant to Guarantee Obligations. Upon the formation or
acquisition of any new direct or indirect Subsidiaries by any Loan Party, then
the Borrower shall, in each case at the Borrower's expense, in connection with
the formation or acquisition of a Subsidiary, within thirty (30) days after such
formation or acquisition or such longer period, not to exceed an additional
thirty (30) days, as the Administrative Agent may agree in its sole discretion,
cause each such Subsidiary that is not a Foreign Subsidiary, and cause each
direct and indirect parent of such Subsidiary (if it has not already done so),
to duly execute and deliver to the Administrative Agent a guaranty or guaranty
supplement, in form and substance reasonably satisfactory to the Administrative
Agent, guaranteeing the other Loan Parties' obligations under the Loan
Documents.

          6.13 Compliance with Environmental Laws. Except, in each case, to the
extent that the failure to do so could reasonably be expected to have a Material
Adverse Effect, comply, and cause all lessees and other Persons operating or
occupying its properties to comply, in all material respects, with all
applicable Environmental Laws and Environmental Permits; obtain and renew all
Environmental Permits necessary for its operations and properties; and conduct
any investigation, study, sampling and testing, and undertake any cleanup,
removal, remedial or other action necessary to remove and clean up all Hazardous
Materials from any of its properties, in accordance with the requirements of all
Environmental Laws.

                                   ARTICLE VII
                               NEGATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder, any Term
Loan or other Obligation hereunder which is accrued and payable shall remain
unpaid or unsatisfied, Holdings and the Borrower shall not, nor shall they
permit any of their Subsidiaries to, directly or indirectly:

          7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired, or
sign or file or authorize the filing under the Uniform Commercial Code of any
jurisdiction a financing statement that names the Borrower or any of its
Subsidiaries as debtor, or sign any security agreement authorizing any secured
party thereunder to file such financing statement, other than the following:

                                       60



          (a) Liens pursuant to any collateral documents entered into with
     respect to the Credit Agreement and any Credit Facilities;

          (b) Liens existing on the date hereof and listed on Schedule 7.01 and
     any modifications, replacements, renewals or extensions thereof; provided,
     that (i) the Lien does not extend to any additional property other than (A)
     after-acquired property that is affixed or incorporated into the property
     covered by such Lien or financed by Indebtedness permitted under Section
     7.03, and (B) and proceeds and products thereof and (ii) the renewal,
     extension or refinancing of the obligations secured or benefited by such
     Liens is permitted by Section 7.03;

          (c) Liens for taxes, assessments or governmental charges which are not
     overdue for a period of more than thirty (30) days or which are being
     contested in good faith and by appropriate proceedings diligently
     conducted, if adequate reserves with respect thereto are maintained on the
     books of the applicable Person in accordance with GAAP;

          (d) statutory Liens of landlords, carriers, warehousemen, mechanics,
     materialmen, repairmen or other like Liens arising in the ordinary course
     of business which secure amounts not overdue for a period of more than
     thirty (30) days or if more than thirty (30) days overdue, are unfiled and
     no other action has been taken to enforce such Lien or which are being
     contested in good faith and by appropriate proceedings diligently
     conducted, if adequate reserves with respect thereto are maintained on the
     books of the applicable Person;

          (e) pledges or deposits in the ordinary course of business in
     connection with workers' compensation, unemployment insurance and other
     social security legislation, other than any Lien imposed by ERISA;

          (f) deposits to secure the performance of bids, trade contracts,
     governmental contracts and leases (other than Indebtedness for borrowed
     money), statutory obligations, surety, stay, customs and appeal bonds,
     performance bonds and other obligations of a like nature incurred in the
     ordinary course of business;

          (g) easements, rights-of-way, restrictions, encroachments, protrusions
     and other similar encumbrances and minor title defects affecting real
     property which, in the aggregate, do not in any case materially interfere
     with the ordinary conduct of the business of the applicable Person;

          (h) Liens securing judgments for the payment of money not constituting
     an Event of Default under Section 8.01(h);

          (i) Liens securing Indebtedness of the type described in and to the
     extent permitted under clause (b)(v) or clause (b)(xv) of the definition of
     Permitted Debt; provided, that (i) such Liens attach concurrently with or
     within one hundred and twenty (120) days after the acquisition, repair,
     replacement or improvement (as applicable) of the property subject to such
     Liens, (ii) such Liens do not at any time encumber any property other than
     the property financed by such Indebtedness and the proceeds and the
     products

                                       61



     thereof and (iii) with respect to Capitalized Leases, such Liens do not at
     any time extend to or cover any assets other than the assets subject to
     such Capitalized Leases;

          (j) Liens arising from operation of the statutory trust under PACA or
     MWPDA or any comparable law, statute or regulation applicable to the
     Borrower and its Subsidiaries and their respective operations based on
     their businesses, provided, that such Liens do not secure past due account
     payable balances exceeding $10,000,000 in the aggregate at any one time
     outstanding, unless, in respect of any such account payables, (i)
     appropriate legal or administrative action has been commenced and is being
     diligently pursued or defended by the Borrower or the applicable Subsidiary
     and (ii) the ability of the applicable vendor to enforce any such Lien
     provided under PACA or MWPDA has been stayed or otherwise legally
     prohibited during the pendency of such action;

          (k) Liens on "farm products" (as defined in the Food Security Act) to
     the extent, in the case of any such Lien, that such Lien (i) was created by
     the Person (but not Holdings or any of its Subsidiaries) which sold such
     property to the Borrower or any of its Subsidiaries and (ii) follows the
     property solely by reason of the provisions of the Food Security Act
     notwithstanding the transfer of title to such property to the Borrower or
     any of its Subsidiaries;

          (l) leases, licenses, subleases or sublicenses granted to others in
     the ordinary course of business and not interfering in any material respect
     with the business of the Borrower or any of its material Subsidiaries;

          (m) Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of customs duties in connection with the
     importation of goods in the ordinary course of business;

          (n) Liens (i) of a collection bank arising under Section 4-210 of the
     Uniform Commercial Code on items in the course of collection, (ii)
     attaching to commodity trading accounts or other commodities brokerage
     accounts incurred in the ordinary course of business; and (iii) in favor of
     a banking institution arising as a matter of law encumbering deposits
     (including the right of set-off) and which are within the general
     parameters customary in the banking industry;

          (o) Liens (i) on cash advances in favor of the seller of any property
     to be acquired in an Investment permitted pursuant to Sections 7.02(i) and
     (o) to be applied against the purchase price for such Investment, and (ii)
     consisting of an agreement to dispose of any property in an Asset Sale
     permitted under Section 7.05, in each case, solely to the extent such
     Investment or Asset Sale, as the case may be, would have been permitted on
     the date of the creation of such Lien;

          (p) Liens on property of any Foreign Subsidiary securing Indebtedness
     of such Foreign Subsidiary to the extent permitted by clause (b)(vi) or
     clause (b)(vii) of the definition of Permitted Debt;

          (q) Liens in favor of the Borrower or a Subsidiary of the Borrower
     securing Indebtedness consisting of Indebtedness of (A) any Loan

                                       62



     Party owing to any other Loan Party, (B) of any Subsidiary of the Borrower
     that is not a Loan Party owed to (1) any other Subsidiary of Holdings that
     is not a Loan Party or (2) Holdings or a Loan Party in respect of an
     Investment permitted under Section 7.02(c) or Section 7.02(o), or (C) any
     Loan Party to any Subsidiary of Holdings which is not a Loan Party;
     provided, that all such Indebtedness of any Loan Party in this clause (C)
     must be expressly subordinated to the Obligations and any Liens in respect
     thereof shall be subordinated to the Liens of the Credit Agreement;

          (r) Liens existing on property at the time of its acquisition or
     existing on the property of any Person that becomes a Subsidiary after the
     date hereof (other than Liens on the Equity Interests of any Person that
     becomes a Subsidiary); provided, that (i) such Lien was not created in
     contemplation of such acquisition or such Person becoming a Subsidiary,
     (ii) such Lien does not extend to or cover any other assets or property
     (other than the proceeds or products thereof), and (iii) the Indebtedness
     secured thereby is permitted by clause (b)(ix) or clause (b)(xii) of the
     definition of Permitted Debt;

          (s) Liens arising from precautionary UCC financing statement filings
     regarding leases entered into by the Borrower or any of its Subsidiaries in
     the ordinary course of business;

          (t) any interest or title of a lessor, sublessor, licensee,
     sublicensee, licensor or sublicensor under any lease or license agreement
     in the ordinary course of business permitted by this Agreement;

          (u) Liens arising out of conditional sale, title retention,
     consignment or similar arrangements for sale of goods entered into by the
     Borrower or any of its Subsidiaries in the ordinary course of business
     permitted by this Agreement;

          (v) Liens deemed to exist in connection with Investments in repurchase
     agreements under Section 7.02;

          (w) Liens encumbering reasonable customary initial deposits and margin
     deposits and similar Liens attaching to commodity trading accounts or other
     brokerage accounts incurred in the ordinary course of business and not for
     speculative purposes;

          (x) other Liens securing Indebtedness outstanding in an aggregate
     principal amount not to exceed $20,000,000; and

          (y) Permitted Encumbrances.

          7.02 Investments. Make or hold any Investments, except:

          (a) Investments held by the Borrower or such Subsidiary in the form of
     Cash Equivalents;

          (b) loans or advances to officers, directors and employees of the
     Borrower and Subsidiaries (i) in an aggregate amount not to exceed
     $3,500,000 at any time outstanding, for travel, entertainment, relocation
     and analogous ordinary business purposes, and (ii) in

                                       63



     connection with such Person's purchase of Equity Interests of Holdings or
     Investors LLC in an aggregate amount not to exceed $2,000,000;

          (c) Investments (i) by Holdings or any of its Subsidiaries in any Loan
     Party (including any new Subsidiary which becomes a Loan Party), and (ii)
     by any Subsidiary of Holdings that is not a Loan Party in any other such
     Subsidiary that is also not a Loan Party;

          (d) Investments consisting of extensions of credit in the nature of
     accounts receivable or notes receivable arising from the grant of trade
     credit in the ordinary course of business, and Investments received in
     satisfaction or partial satisfaction thereof from financially troubled
     account debtors;

          (e) Investments arising out of transactions permitted under Sections
     7.01, 7.03, 7.04, 7.05 and 7.06;

          (f) Investments existing on the date hereof and set forth on Schedule
     7.02 and any modification, replacement, renewal or extension thereof;
     provided, that the amount of the original Investment is not increased
     except by the terms of such Investment or as otherwise permitted by this
     Section 7.02;

          (g) Investments in Swap Contracts designed to hedge against
     fluctuations in interest rates, foreign exchange rates or commodities
     pricing risks incurred in the ordinary course of business and consistent
     with prudent business practice and not for speculative purposes;

          (h) promissory notes and other non-cash consideration received in
     connection with Asset Sales permitted by Section 7.05;

          (i) the purchase or other acquisition of all or substantially all of
     the property and assets or business of, any Person or of assets
     constituting a business unit, a line of business or division of such
     Person, or of all of the Equity Interests in a Person that, upon the
     consummation thereof, will be wholly owned directly by the Borrower or one
     or more of its wholly owned Subsidiaries (including, without limitation, as
     a result of a merger or consolidation); provided, that, with respect to
     each purchase or other acquisition made pursuant to this Section 7.02(i)
     (each, a "Permitted Acquisition"):

               (A) each applicable Loan Party and any such newly created or
          acquired Subsidiary shall have complied with the requirements of
          Section 6.12;

               (B) the total cash and noncash consideration (including, without
          limitation, the fair market value of all Equity Interests issued or
          transferred to the sellers thereof, earnouts and other contingent
          payment obligations to such sellers and all assumptions of
          Indebtedness in connection therewith, but excluding any Excluded
          Consideration) paid by or on behalf of the Borrower and its
          Subsidiaries for any such purchase or other acquisition, when
          aggregated with the total cash and noncash consideration paid by or on
          behalf of the Borrower and its Subsidiaries for all other purchases
          and other acquisitions made by the Borrower

                                       64



          and its Subsidiaries pursuant to this Section 7.02(i), shall not
          exceed $100,000,000;

               (C) immediately before and immediately after giving Pro Forma
          Effect to any such purchase or other acquisition, no Default shall
          have occurred and be continuing; and

               (D) the Borrower shall have delivered to the Administrative
          Agent, on behalf of the Lenders, at least one (1) Business Day prior
          to the date on which any such purchase or other acquisition is to be
          consummated, a certificate of a Responsible Officer, in form and
          substance reasonably satisfactory to the Administrative Agent,
          certifying that all of the requirements set forth in this clause (i)
          have been satisfied or will be satisfied on or prior to the
          consummation of such purchase or other acquisition;

          (j) the Acquisition and the Mergers;

          (k) Investments in the ordinary course of business consisting of (i)
     endorsements for collection or deposit and (ii) customary trade
     arrangements with customers consistent with past practices;

          (l) Investments (including debt obligations and Equity Interests)
     received in connection with the bankruptcy or reorganization of suppliers
     and customers and in settlement of delinquent obligations of, and other
     disputes with, customers and suppliers arising in the ordinary course of
     business and upon the foreclosure with respect to any secured Investment or
     other transfer of title with respect to any secured Investment;

          (m) the licensing, sublicensing or contribution of IP Rights pursuant
     to joint marketing arrangements with Persons other than Holdings and its
     Subsidiaries;

          (n) loans and advances to Holdings in lieu of, and not in excess of
     the amount of (after giving effect to any other loans, advances or
     Restricted Payments in respect thereof), Restricted Payments to the extent
     permitted to be made to Holdings in accordance with Section 7.06; and

          (o) so long as immediately after giving effect to any such Investment
     no Event of Default has occurred and is continuing, other Investments not
     exceeding $65,000,000 in the aggregate in any fiscal year of the Borrower;
     provided, however, that, such amount may be increased by the sum of (A) the
     net proceeds of Permitted Subordinated Indebtedness and (B) Permitted
     Equity Issuances in an aggregate amount not to exceed $75,000,000.

          7.03 Incurrence of Indebtedness. Directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur"), or
permit to be incurred, any Indebtedness, except (a) the Borrower and its
Subsidiaries may incur Senior Debt (and, after a Qualifying IPO, the Borrower
may issue Disqualified Equity Interests) if the Senior Leverage Ratio for the
Borrower's most recently ended four (4) full fiscal quarters for which internal
financial statements are available

                                       65



immediately preceding the date on which such additional Senior Debt is incurred
would have been less than 4.75 to 1.00, (b) the Borrower and its Subsidiaries
may incur Permitted Subordinated Indebtedness (and, after a Qualifying IPO, the
Borrower may issue Disqualified Equity Interests) if the Interest Coverage Ratio
for the Borrower's most recently ended four (4) full fiscal quarters for which
internal financing statements are available immediately preceding the date on
which such Permitted Subordinated Indebtedness is incurred (or such Disqualified
Equity Interests are issued) would have been greater than 2.00:1.00, and (c)
Holdings, the Borrower and its Subsidiaries may incur Permitted Debt; in the
cases of clauses (a) and (b), determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if such Indebtedness had
been incurred or Disqualified Equity Interests had been issued, as the case may
be, at the beginning of such four (4) quarter period.

          For purposes of determining compliance with this Section 7.03, in the
event that any proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt, or is entitled to be incurred pursuant to clause
(a) or (b) of this Section 7.03, the Borrower will be permitted to classify such
item of Indebtedness on the date of its incurrence, and from time to time may
reclassify, in any manner that complies with this Section 7.03 at such time.
Indebtedness under the Credit Agreement and Senior Subordinated Notes on the
date hereof shall be deemed to have been incurred on the date hereof in reliance
on the definition of Permitted Debt.

          7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with
or into another Person, or dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

          (a) any Subsidiary may merge with (i) the Borrower (including a
     merger, the purpose of which is to reorganize the Borrower into a new
     jurisdiction), provided, that the Borrower shall be the continuing or
     surviving Person or the surviving Person shall expressly assume the
     obligations of the Borrower pursuant to documents reasonably acceptable to
     the Administrative Agent, or (ii) any one or more other Subsidiaries,
     provided, that when any Guarantor is merging with another Subsidiary, (A)
     the Guarantor shall be the continuing or surviving Person or (B) to the
     extent constituting an Investment, such Investment must be a permitted
     Investment in or Indebtedness of a Subsidiary which is not a Loan Party in
     accordance with Sections 7.02 and 7.03;

          (b) any Subsidiary may dispose of all or substantially all of its
     assets (upon voluntary liquidation or otherwise) to the Borrower or to
     another Subsidiary; provided, that if the transferor in such a transaction
     is a Guarantor, then (i) the transferee must either be the Borrower or a
     Guarantor or (ii) to the extent constituting an Investment, such Investment
     must be a permitted Investment in or Indebtedness of a Subsidiary which is
     not a Loan Party in accordance with Sections 7.02 and 7.03, respectively;

          (c) any Subsidiary may merge with any other Person in order to effect
     an Investment permitted pursuant to Section 7.02; provided, that (i) the
     continuing or surviving Person shall be a Subsidiary, which together with
     each of its Subsidiaries, shall have complied with the requirements of
     Section 6.12 or (ii) to the extent constituting an

                                       66



     Investment, such Investment must be a permitted Investment in accordance
     with Section 7.02;

          (d) the Borrower and its Subsidiaries may consummate the Acquisition
     and the Mergers; and

          (e) a merger, dissolution, liquidation, consolidation or Asset Sale,
     the purpose of which is to effect an Asset Sale permitted pursuant to
     Section 7.05.

          7.05 Asset Sales. Consummate, or permit any of its Subsidiaries to
consummate, an Asset Sale unless (a) Holdings, the Borrower or any Subsidiary of
the Borrower, as the case may, be receives consideration at the time of such
Asset Sale at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of, (b) such fair market value is
determined by the Borrower's Board of Directors and evidenced by a resolution of
the Board of Directors set forth in an officers' certificate delivered to the
Administrative Agent, and (c) at least seventy five-percent (75%) of the
consideration therefor received by Holdings, the Borrower or such Subsidiary is
in the form of cash, Cash Equivalents or Replacement Assets or a combination
thereof. For purposes of clause (c) immediately above, each of the following
shall be deemed to be cash:

          (a) any liabilities (as shown on Holdings', the Borrower's or such
     Subsidiary's most recent balance sheet) of Holdings, the Borrower or any
     such Subsidiary (other than contingent liabilities and liabilities that are
     by their terms subordinated to the Senior Subordinated Notes or any
     guarantees related thereto) that are assumed by the transferee of any such
     assets and, in the case of liabilities other than Non-Recourse Debt, where
     Holdings, the Borrower and all such Subsidiaries are released from any
     further liability in connection therewith; and

          (b) any securities, notes or other obligations received by Holdings,
     the Borrower or any such Subsidiary from such transferee that are within
     one hundred and eighty (180) days of receipt thereof converted by Holdings,
     the Borrower or such Subsidiary into cash (to the extent of the cash
     received in that conversion).

          For purposes of clause (c) above, any liabilities of Holdings, the
Borrower or any such Subsidiary that are not assumed by the transferee of such
assets in respect of which Holdings, the Borrower and all such Subsidiaries are
not released from any future liabilities in connection therewith shall not be
considered consideration.

          Within three hundred and sixty-five (365) days after the receipt of
any Net Proceeds from an Asset Sale, the Borrower may apply such Net Proceeds at
its option:

          (1) to repay Senior Debt and, if the Senior Debt repaid is revolving
     credit Indebtedness, to correspondingly reduce commitments with respect
     thereto;

          (2) to acquire all or substantially all of the assets of, or a
     majority of the voting Equity Interests of, another Person engaged in a
     business permitted by Section 7.07;

                                       67



          (3) to acquire other assets, including investments in property, or to
     make capital expenditures, that, in either case, are used or useful in a
     business permitted by Section 7.07; or

          (4) any combination of the foregoing.

          Pending the final application of any such Net Proceeds, the Borrower
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited hereunder.

          Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15,000,000, the Borrower will
prepay the Term Loans in accordance with Section 2.03(b)(ii). The amount of Term
Loans prepaid will be as more specifically set forth in Section 2.03(b)(ii) plus
accrued and unpaid interest to the date of prepayment, and will be payable in
cash. If the aggregate principal amount of Term Loans exceeds the amount of
Excess Proceeds, the Term Loans shall be prepaid on a pro rata basis based on
the principal amount of the Term Loans. Upon completion of each such prepayment
of the Term Loans the amount of Excess Proceeds shall be reset at zero.

          7.06 Restricted Payments. Directly or indirectly, or permit any
Subsidiary to, directly or indirectly,

          (i) declare or pay any dividend or make any other payment or
     distribution on account of Holdings' or any of its Subsidiaries' Equity
     Interests (including, without limitation, any payment in connection with
     any merger or consolidation involving the Borrower or any of its
     Subsidiaries), other than (A) dividends or distributions payable in Equity
     Interests (other than Disqualified Equity Interests) of Holdings, the
     Borrower or a Subsidiary of the Borrower or (B) dividends or distributions
     by any Subsidiary of the Borrower to the Borrower or any of its
     Subsidiaries;

          (ii) purchase, redeem or otherwise acquire or retire for value
     (including, without limitation, in connection with any merger or
     consolidation involving the Borrower) any Equity Interests of the Borrower
     or Holdings;

          (iii) make any payment of principal or premium on or with respect to,
     or purchase, redeem, defease or otherwise acquire or retire for value, any
     Permitted Holdco Debt, any Permitted Subordinated Indebtedness or the
     Senior Subordinated Notes (collectively, "Junior Financing") except a
     payment of principal at the stated maturity thereof or in connection with a
     Permitted Refinancing otherwise permitted hereunder (all such payments and
     other actions set forth in clauses (i) through (iii) above being
     collectively referred to as "Restricted Payments"),

     unless, at the time of and after giving effect to such Restricted Payment:

               (A) no Default shall have occurred and be continuing or would
          occur as a consequence thereof; and

                                       68



               (B) the Borrower would, at the time of such Restricted Payment
          and after giving pro forma effect thereto as if such Restricted
          Payment had been made at the beginning of the applicable four (4)
          fiscal quarters then ended, have been permitted to incur at least
          $1.00 of additional Indebtedness under each of clauses (a) and (b)
          under Section 7.03; and

               (C) such Restricted Payment, together with the aggregate amount
          of all other Restricted Payments made by the Holdings and its
          Subsidiaries after the date hereof (excluding Restricted Payments
          permitted by clauses (ii), (iii), (vi), (vii), (viii), (x) and (xi) of
          the next succeeding paragraph), is less than the sum, without
          duplication, of:

                    (1) 50% of the Consolidated Net Income of the Borrower for
               the period (taken as one accounting period) beginning on the date
               hereof and ending on the date of the Borrower's most recently
               ended fiscal quarter for which internal financial statements are
               available at the time of such Restricted Payment (or, if such
               Consolidated Net Income for such period is a deficit, less 100%
               of such deficit), plus


                    (2) 100% of the aggregate net proceeds (including the fair
               market value of property) received by the Borrower subsequent to
               the date hereof as a contribution to its common Equity Interests
               or from the issue or sale of Equity Interests of the Borrower
               (other than net proceeds from the issue and sale of Disqualified
               Equity Interests) or from the issuance or sale of convertible or
               exchangeable Disqualified Equity Interests or convertible or
               exchangeable debt securities of the Borrower that have been
               converted into or exchanged for such Equity Interests (other than
               Equity Interests (or Disqualified Equity Interests or debt
               securities) sold to a Subsidiary of the Borrower).

          The preceding provisions will not prohibit:

          (i) the payment of any dividend within sixty (60) days after the date
     of declaration thereof, if at such date of declaration such payment would
     have complied with the provisions of this Agreement;

          (ii) the redemption, repurchase, retirement, defeasance or other
     acquisition of any subordinated Indebtedness of Holdings, the Borrower or
     any Subsidiary of the Borrower or of any Equity Interests of the Borrower
     or Holdings in exchange for, or out of the net proceeds of the
     substantially concurrent sale (other than to a Subsidiary of the Borrower)
     of, Equity Interests of Holdings or, after a Qualifying IPO, the Borrower
     (other than Disqualified Equity Interests); provided, that the amount of
     any such net proceeds that are utilized for any such redemption,
     repurchase, retirement, defeasance or other acquisition shall be excluded
     from clause (C)(2) of the preceding sentence;

                                       69



          (iii) the repayment, defeasance, redemption, repurchase or other
     acquisition of subordinated Indebtedness of Holdings, the Borrower or any
     Subsidiary with the net proceeds from an incurrence of Permitted
     Subordinated Indebtedness;

          (iv) the payment of any dividend by a Subsidiary of the Borrower to
     the holders of any series or class of its common Equity Interests on a pro
     rata basis;

          (v) the repurchase, redemption or other acquisition or retirement for
     value of any Equity Interests of the Borrower or Holdings and any
     distribution, loan or advance to Holdings (or by Holdings to Investors LLC)
     for the repurchase, redemption or other acquisition or retirement for value
     of any Equity Interests of Holdings (or by Investors LLC of its Equity
     Interests), in each case held by any former or current employees, officers,
     directors or consultants of Holdings, the Borrower or any of its
     Subsidiaries or their respective estates, spouses, former spouses or family
     members under any management equity plan or stock option or other
     management or employee benefit plan upon the death, disability or
     termination of employment of such Persons, in an amount not to exceed
     $3,000,000 in any calendar year; provided, that the Borrower and Holdings
     may carry over and make in subsequent calendar years, in addition to the
     amounts permitted for such calendar year, the amount of such purchases,
     redemptions or other acquisitions or retirements for value permitted to
     have been made but not made in any preceding calendar year up to a maximum
     of $9,000,000 in any calendar year; and provided, further that such amount
     in any calendar year may be increased by an amount not to exceed (x) the
     net proceeds from the sale of Equity Interests (other than Disqualified
     Equity Interests) of Holdings, the Borrower (or Investors LLC to the extent
     such net proceeds are contributed to the common equity of Holdings) to
     employees, officers, directors or consultants of Holdings, the Borrower and
     its Subsidiaries that occurs after the date hereof (to the extent the cash
     proceeds from the sale of such Equity Interests have not otherwise been
     applied to the payment of Restricted Payments pursuant to clause (ii) above
     or previously applied to the payment of Restricted Payments pursuant to
     this clause (v)) plus (y) the cash proceeds of key man life insurance
     policies received by the Borrower and its Subsidiaries after the date
     hereof less any amounts previously applied to the payment of Restricted
     Payments pursuant to this clause (v); provided, further that cancellation
     of Indebtedness owing to Holdings, the Borrower or its Subsidiaries from
     employees, officers, directors and consultants of Holdings, the Borrower or
     any of its Subsidiaries in connection with a repurchase of Equity Interests
     of Investors LLC , Holdings or the Borrower from such Persons will not be
     deemed to constitute a Restricted Payment for purposes of this covenant or
     any other provisions of this Agreement; provided, further that the net
     proceeds from such sales of Equity Interests described in clause (x) of
     this clause (v) shall be excluded from clause (C)(2) of the preceding
     sentence to the extent such proceeds have been or are applied to the
     payment of Restricted Payments pursuant to this clause (v);

          (vi) the payment of dividends or other distributions or the making of
     loans or advances to Holdings (or by Holdings to Investors LLC) in amounts
     required for Holdings (or Investors LLC) to pay franchise taxes and other
     fees required to maintain its existence and provide for all other operating
     costs of Holdings (and Investors LLC) to the extent attributable to the
     ownership or operation of the Borrower and its Subsidiaries,

                                       70



     including, without limitation, in respect of director fees and expenses,
     administrative, legal and accounting services provided by third parties and
     other costs and expenses including all costs and expenses with respect to
     filings with the SEC, of up to an aggregate under this clause (vi) of
     $500,000 per fiscal year plus any indemnification claims made by directors
     or officers of Holdings attributable to the ownership or operation of the
     Borrower and its Subsidiaries;

          (vii) the payment of dividends or other distributions by the Borrower
     to Holdings in amounts required to pay the tax obligations of Holdings
     attributable to the Borrower and its Subsidiaries determined as if the
     Borrower and its Subsidiaries had filed a separate consolidated, combined
     or unitary return for the relevant taxing jurisdiction; provided, that any
     refunds received by Holdings attributable to the Borrower or any of its
     Subsidiaries shall promptly be returned by Holdings to the Borrower through
     a contribution to the Equity Interests of, or the purchase of Equity
     Interests (other than Disqualified Equity Interests) of the Borrower from
     the Borrower; and provided, further that the amount of any such
     contribution or purchase shall be excluded from clause (C)(2) of the
     preceding sentence;

          (viii) repurchases of Equity Interests deemed to occur upon the
     cashless exercise of stock options and warrants;

          (ix) other Restricted Payments not otherwise permitted by this Section
     7.06 in an aggregate amount not to exceed $30,000,000;

          (x) Restricted Payments to holders of equity interests of the Target
     Company contemplated by the Merger Agreement, including in connection with
     any post-closing purchase price adjustments pursuant to the Merger
     Agreement;

          (xi) the declaration and payment of dividends and distributions to
     holders of any class or series of Disqualified Equity Interests of the
     Borrower or any of its Subsidiaries issued or incurred in accordance with
     Section 7.03;

          (xii) following the first Qualifying IPO of the Borrower or Holdings
     after the date of this Agreement, the payment of dividends on the
     Borrower's common stock (and, in the case of a Qualifying IPO of Holdings,
     solely for the purpose of the payment of dividends to Holdings to enable it
     to pay dividends on Holdings' common stock) in an amount not to exceed six
     percent (6%) per annum of the gross proceeds of such Qualifying IPO
     received by Holdings, or the Borrower;

          (xiii) dividends paid after September 30, 2004 in an amount equal to
     any reduction in taxes actually realized by the Borrower and its
     Subsidiaries in the form of cash refunds or from deductions when applied to
     offset income or gain as a direct result of (I) the tender costs, including
     the costs of any premium paid or interest expense, incurred in connection
     with the Existing Notes Tender Offer, prior to the Mergers, (II) swap
     termination costs incurred in connection with terminating interest rate
     swap arrangements in respect to Indebtedness being refinanced as
     contemplated in the offering memorandum for the Senior Subordinated Notes,
     (III) compensation expense incurred in

                                       71



     connection with the repurchase or rollover of stock options or transaction
     bonuses, or (IV) the write off of deferred financing charges as a result of
     the refinancing contemplated in the offering memorandum for the Senior
     Subordinated Notes, in the case of each of clauses (I) through (IV) in
     connection with the Mergers; provided, that the aggregate amount of
     dividends pursuant to this clause (xiii) shall not exceed $30,000,000;

provided, however, that in the case of clauses (ii), (iii), (iv), (v), (vi),
(ix), (xi), (xii), and (xiii) above, no Default or Event of Default has occurred
and is continuing.

          The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by Holdings, the Borrower
or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The
fair market value of any assets or securities that are required to be valued for
the purposes hereof shall, if the fair market value thereof exceeds $2,000,000,
be determined by the Board of Directors whose resolution with respect thereto
shall be delivered to the Administrative Agent. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $15,000,000. Not later than the date of making any
Restricted Payment, the Borrower shall deliver to the Administrative Agent a
certificate of a Responsible Officer stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 7.06 were computed.

          7.07 Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by the
Borrower and its Subsidiaries on the date hereof or any business reasonably
related or ancillary thereto.

          7.08 Transactions with Affiliates. Enter into any transaction of any
kind with any Affiliate of the Borrower, whether or not in the ordinary course
of business, other than (a) transactions among Loan Parties, (b) on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary
as would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm's length transaction with a Person other than an Affiliate, (c)
the payment of fees and expenses in connection with the consummation of the
Transactions, (d) so long as no Event of Default shall have occurred and be
continuing under Section 8.01(f), the payment of fees to the Sponsor pursuant to
the Sponsor Management Agreement, (e) equity issuances by Holdings permitted
under Section 7.06, (f) loans and other transactions by Holdings and its
Subsidiaries to the extent permitted under this Article VII, (g) customary fees
may be paid to any directors of Holdings and reimbursement of reasonable
out-of-pocket costs of the directors of Holdings, (h) Holdings and its
Subsidiaries may enter into employment and severance arrangements with officers
and employees in the ordinary course of business and (i) Holdings and its
Subsidiaries may make payments pursuant to the tax sharing agreements among
Holdings and its Subsidiaries.

          7.09 Burdensome Agreements. Enter into or permit to exist any
Contractual Obligation (other than this Agreement or any other Loan Document)
that limits the ability of any Subsidiary of the Borrower to make Restricted
Payments to the Borrower or any Guarantor which is a Subsidiary of the Borrower
or to otherwise transfer property to or invest in the Borrower or any Guarantor,
except for any agreement in effect (a) on the date hereof, (b) at the

                                       72



time any Subsidiary becomes a Subsidiary of the Borrower, so long as such
agreement was not entered into solely in contemplation of such Person becoming a
Subsidiary of the Borrower, (c) representing Indebtedness of a Subsidiary of the
Borrower which is not a Loan Party which is permitted by Section 7.03, or (d) in
connection with any Asset Sale permitted by Section 7.05.

          7.10 Use of Proceeds. Use the proceeds of the Borrowing, whether
directly or indirectly, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose.

          7.11 Amendments of Organization Documents. Amend any of its
Organization Documents in a manner materially adverse to the Administrative
Agent or the Lenders.

          7.12 Accounting Changes. Make any change in fiscal year.

          7.13 Amendment of Merger Agreement. Amend, modify or supplement the
Merger Agreement or waive or otherwise consent to any change or departure from
any of the terms or conditions of the Merger Agreement in any manner materially
adverse to the Administrative Agent or the Lenders.

          7.14 Holding Company. (a) In the case of Holdings, (i) conduct,
transact or otherwise engage in any business or operations other than those
incidental to its ownership of the Equity Interests of the Borrower, the
performance of the Loan Documents and any transactions that Holdings is
permitted to enter into or consummate under this Article VII or (ii) incur any
Indebtedness other than Permitted Holdco Debt, and Indebtedness otherwise
permitted by clause (c) of the definition of Permitted Debt; or

          (b) Other than in connection with a Qualifying IPO, permit the
Borrower to be a Subsidiary that is not wholly owned by Holdings.

          7.15 Prepayments, Amendments of Indebtedness. (a) Make any payment in
violation of any subordination terms of any Junior Financing Documentation, or
(b) amend, modify or change in any manner materially adverse to the interests of
the Administrative Agent or the Lenders any term or condition of any Junior
Financing Documentation.

                                  ARTICLE VIII
                         EVENTS OF DEFAULT AND REMEDIES

          8.01 Events of Default. Any of the following shall constitute an Event
of Default:

          (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
     when and as required to be paid herein, any amount of principal of any Term
     Loan, or (ii) within five (5) Business Days after the same becomes due, any
     interest on any Term Loan or any other amount payable hereunder or with
     respect to any other Loan Document; or

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          (b) Specific Covenants. The Borrower fails to perform or observe any
     term, covenant or agreement contained in any of Sections 6.03(a), 6.05
     (solely with respect to Holdings and the Borrower) or 6.11 or Article VII;
     or

          (c) Other Defaults. Any Loan Party fails to perform or observe any
     other covenant or agreement (not specified in Section 8.01(a) or (b) above)
     contained in any Loan Document on its part to be performed or observed and
     such failure continues for thirty (30) days after notice thereof by the
     Administrative Agent to the Borrower; or

          (d) Representations and Warranties. Any representation, warranty,
     certification or statement of fact made or deemed made by or on behalf of
     the Borrower or any other Loan Party herein, in any other Loan Document, or
     in any document required to be delivered in connection herewith or
     therewith shall be incorrect or misleading in any material respect when
     made or deemed made; or

          (e) Cross-Acceleration. A default by Holdings, the Borrower or any
     Subsidiary under any mortgage, indenture or instrument under which there
     may be issued or by which there may be secured or evidenced any
     Indebtedness for money borrowed by Holdings, the Borrower or any of its
     Subsidiaries (or the payment of which is guaranteed by the Borrower or any
     of its Subsidiaries) whether such Indebtedness or guarantee now exists, or
     is created after the date hereof, if that default (i) is caused by a
     failure to make any payment when due at final maturity of any such
     Indebtedness (a "Payment Default") or (ii) results in the acceleration of
     such Indebtedness prior to its express maturity, and, in each case, the
     principal amount of any such Indebtedness, together with the principal
     amount of any such Indebtedness under which there has been a Payment
     Default or the maturity of which has been so accelerated, aggregates to the
     Threshold Amount or more; or

          (f) Insolvency Proceedings, Etc. Any Loan Party or any of its
     Subsidiaries institutes or consents to the institution of any proceeding
     under any Debtor Relief Law, or makes an assignment for the benefit of
     creditors; or applies for or consents to the appointment of any receiver,
     trustee, custodian, conservator, liquidator, rehabilitator or similar
     officer for it or for all or any material part of its property; or any
     receiver, trustee, custodian, conservator, liquidator, rehabilitator or
     similar officer is appointed without the application or consent of such
     Person and the appointment continues undischarged or unstayed for sixty
     (60) calendar days; or any proceeding under any Debtor Relief Law relating
     to any such Person or to all or any material part of its property is
     instituted without the consent of such Person and continues undismissed or
     unstayed for sixty (60) calendar days, or an order for relief is entered in
     any such proceeding; or

          (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any
     Subsidiary becomes unable or admits in writing its inability or fails
     generally to pay its debts as they become due, or (ii) any writ or warrant
     of attachment or execution or similar process is issued or levied against
     all or any material part of the property of any such Person and is not
     released, vacated or fully bonded within sixty (60) days after its issue or
     levy; or

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          (h) Judgments. There is entered against any Loan Party or any
     Subsidiary a final judgment or order for the payment of money in an
     aggregate amount exceeding the Threshold Amount (to the extent not covered
     by independent third-party insurance as to which the insurer has been
     notified of such judgment or order and does not deny coverage) and there is
     a period of sixty (60) consecutive days during which a stay of enforcement
     of such judgment, by reason of a pending appeal or otherwise, is not in
     effect; or

          (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
     Multiemployer Plan which has resulted or could reasonably be expected to
     result in liability of any Loan Party under Title IV of ERISA to the
     Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount which
     could reasonably be expected to result in a Material Adverse Effect, or
     (ii) any Loan Party or any ERISA Affiliate fails to pay when due, after the
     expiration of any applicable grace period, any installment payment with
     respect to its withdrawal liability under Section 4201 of ERISA under a
     Multiemployer Plan in an aggregate amount which could reasonably be
     expected to result in a Material Adverse Effect; or

          (j) Invalidity of Loan Documents. Any provision of any Loan Document,
     at any time after its execution and delivery and for any reason other than
     as expressly permitted hereunder or thereunder (including as a result of a
     transaction permitted under Section 7.04 or 7.05) or satisfaction in full
     of all the Obligations, ceases to be in full force and effect; or any Loan
     Party contests in writing the validity or enforceability of any provision
     of any Loan Document; or any Loan Party denies that it has any or further
     liability or obligation under any Loan Document (other than as a result of
     repayment in full of the Obligations and termination of the Commitments),
     or purports to revoke or rescind any Loan Document; or

          (k) Change of Control. There occurs any Change of Control; or

          (l) Junior Financing Documentation. (i) Any of the Obligations of the
     Loan Parties under the Loan Documents for any reason shall cease to be
     "Senior Debt" (or any comparable term) under, and as defined in, the Senior
     Subordinated Notes Indenture and any other applicable Junior Financing
     Documentation or (ii) the subordination provisions set forth in the Senior
     Subordinated Notes Indenture (or comparable provisions in any other Junior
     Financing Documentation) shall, in whole or in part, cease to be effective
     or cease to be legally valid, binding and enforceable against the holders
     of the Senior Subordinated Notes or any other Junior Financing, if
     applicable.

          8.02 Remedies Upon Event of Default. If any Event of Default occurs
and is continuing, the Administrative Agent shall, at the request of, or may,
with the consent of, the Required Lenders, take any or all of the following
actions:

          (a) declare the unpaid principal amount of all outstanding Term Loans,
     all interest accrued and unpaid thereon, and all other amounts owing or
     payable hereunder or under any other Loan Document to be immediately due
     and payable, without

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     presentment, demand, protest or other notice of any kind, all of which are
     hereby expressly waived by the Borrower; and

          (b) exercise on behalf of itself and the Lenders all rights and
     remedies available to it and the Lenders under the Loan Documents or
     applicable Law;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Term Loans shall
automatically terminate, the unpaid principal amount of all outstanding Term
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable, in each case without further act of the Administrative Agent or
any Lender.

          8.03 Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Term Loans have automatically become immediately
due and payable), any amounts received on account of the Obligations shall be
applied by the Administrative Agent in the following order:

          First, to payment of that portion of the Obligations constituting
     fees, indemnities, expenses and other amounts (including Attorney Costs
     payable under Section 10.04 and amounts payable under Article III) payable
     to the Administrative Agent in its capacity as such;

          Second, to payment of that portion of the Obligations constituting
     fees, indemnities and other amounts (other than principal and interest)
     payable to the Lenders (including Attorney Costs payable under Section
     10.05 and amounts payable under Article III), ratably among them in
     proportion to the amounts described in this clause Second payable to them;

          Third, to payment of that portion of the Obligations constituting
     accrued and unpaid interest on the Term Loans, ratably among the Lenders in
     proportion to the respective amounts described in this clause Third payable
     to them;

          Fourth, to payment of that portion of the Obligations constituting
     unpaid principal of the Term Loans, ratably among the Lenders in proportion
     to the respective amounts described in this clause Fourth held by them;

          Fifth, to the payment of all other Obligations of the Loan Parties
     owing under or in respect of the Loan Documents that are due and payable to
     the Administrative Agent on such date, ratably based upon the respective
     aggregate amounts of all such Obligations owing to the Administrative Agent
     on such date; and

          Last, the balance, if any, after all of the Obligations have been
     indefeasibly paid in full, to the Borrower or as otherwise required by Law.

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                                   ARTICLE IX
                      ADMINISTRATIVE AGENT AND OTHER AGENTS

          9.01 Appointment and Authorization of Agents. Each Lender hereby
irrevocably appoints, designates and authorizes each Administrative Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, nor shall any Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" herein and in the other Loan
Documents with reference to any Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

          9.02 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.

          9.03 Liability of Agents. No Agent-Related Person shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be responsible
in any manner to any Lender or participant for any recital, statement,
representation or warranty made by any Loan Party or any officer thereof,
contained herein or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Affiliate thereof.

          9.04 Reliance by Agents. (a) Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to

                                       77



be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to any Loan Party), independent accountants and other experts selected
by such Agent. Each Agent shall be fully justified in failing or refusing to
take any action under any Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Required Lenders (or such greater number of Lenders as may be expressly required
hereby in any instance) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

          (b) For purposes of determining compliance with the conditions
specified in Article IV, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

          9.05 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default and stating that
such notice is a "notice of default." The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to any Event of Default as may be directed by the
Required Lenders in accordance with Article VIII; provided, however, that unless
and until the Administrative Agent has received any such direction, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable or in the best interest of the Lenders.

          9.06 Credit Decision; Disclosure of Information by Agents. Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by any Agent hereafter taken, including any
consent to and acceptance of any assignment or review of the affairs of any Loan
Party or any Affiliate thereof, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender as to any matter,
including whether Agent-Related Persons have disclosed material information in
their possession. Each Lender represents to each Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties
and their respective Subsidiaries, and all applicable bank or other regulatory
Laws relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Borrower and the other
Loan Parties hereunder. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on

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such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
any Agent herein, such Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of any of the Loan Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

          9.07 Indemnification of Agents. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any
Loan Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person's own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section 9.07. In the case of any investigation, litigation or
proceeding giving rise to any Indemnified Liabilities, this Section 9.07 applies
whether any such investigation, litigation or proceeding is brought by any
Lender or any other Person. Without limitation of the foregoing, each Lender
shall reimburse the Administrative Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section 9.07 shall survive termination of the
Commitments, the payment of all other Obligations and the resignation of the
Administrative Agent.

          9.08 Agents in their Individual Capacities. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire Equity Interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with each of
the Loan Parties and their respective Affiliates as though Bank of America were
not the Administrative Agent hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Loan Party or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Party or such Affiliate) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America shall have the
same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not the Administrative Agent, and the
terms "Lender" and "Lenders" include Bank of America in its individual capacity.

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          9.09 Successor Agents. The Administrative Agent may resign as the
Administrative Agent upon thirty (30) days' notice to the Lenders. If the
Administrative Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be consented to by the Borrower at all times other than
during the existence of an Event of Default under Section 8.01(f) (which consent
of the Borrower shall not be unreasonably withheld or delayed). If no successor
agent is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, the Person
acting as such successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor administrative agent and/or supplemental
administrative agent, as the case may be, and the retiring Administrative
Agent's appointment, powers and duties as the Administrative Agent shall be
terminated without any other or further act or deed on the part of any other
Lender. After the retiring Administrative Agent's resignation hereunder as the
Administrative Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Administrative Agent under this Agreement. If no
successor agent has accepted appointment as the Administrative Agent by the date
which is thirty (30) days following the retiring Administrative Agent's notice
of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above. Upon the
acceptance of any appointment as the Administrative Agent hereunder by a
successor, the Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, discretion, privileges, and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents. After the retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent.

          9.10 Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Term Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

          (a) to file and prove a claim for the whole amount of the principal
     and interest owing and unpaid in respect of the Term Loans and all other
     Obligations that are owing and unpaid and to file such other documents as
     may be necessary or advisable in order to have the claims of the Lenders
     and the Administrative Agent (including any claim for the reasonable
     compensation, expenses, disbursements and advances of the Lenders and the
     Administrative Agent and their respective agents and counsel and all other
     amounts due the Lenders and the Administrative Agent under Sections 2.06
     and 10.04) allowed in such judicial proceeding; and

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          (b) to collect and receive any monies or other property payable or
     deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the Agents
and their respective agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.06 and 10.04.

          Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

          9.11 Guaranty Matters. (a) The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release any
Guarantor from its obligations under the Guaranty if such Person ceases to be a
Subsidiary as a result of a transaction permitted hereunder.

          (b) Upon request by the Administrative Agent at any time, the Required
     Lenders will confirm in writing the Administrative Agent's authority to
     release any Guarantor from its obligations under the Guaranty pursuant to
     this Section 9.11. In each case as specified in this Section 9.11, the
     Administrative Agent will, at the Borrower's expense, execute and deliver
     to the applicable Loan Party such documents as such Loan Party may
     reasonably request to evidence the release of such Guarantor from its
     obligations under the Guaranty, in each case in accordance with the terms
     of the Loan Documents and this Section 9.11.

          9.12 Other Agents; Arrangers and Managers. None of the Lenders or
other Persons identified on the facing page or signature pages of this Agreement
as a "co-syndication agent," "co-agent," "book manager," "lead manager,"
"arranger," "lead arranger" or "co-arranger" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
the Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders or other Persons so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.

          9.13 Appointment of Supplemental Administrative Agents. (a) It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any Law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case the Administrative Agent
deems that by

                                       81



reason of any present or future Law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, the Administrative Agent is hereby authorized to appoint
an additional individual or institution selected by the Administrative Agent in
its sole discretion as a separate trustee, co-trustee, administrative agent,
collateral agent, administrative sub-agent or administrative co-agent (any such
additional individual or institution being referred to herein individually as a
"Supplemental Administrative Agent" and collectively as "Supplemental
Administrative Agents").

          (b) Should any instrument in writing from the Borrower, Holdings or
any other Loan Party be required by any Supplemental Administrative Agent so
appointed by the Administrative Agent for more fully and certainly vesting in
and confirming to him or it such rights, powers, privileges and duties, the
Borrower or Holdings, as applicable, shall, or shall cause such Loan Party to,
execute, acknowledge and deliver any and all such instruments promptly upon
request by the Administrative Agent. In case any Supplemental Administrative
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Administrative Agent, to the extent permitted by law, shall vest in and be
exercised by the Administrative Agent until the appointment of a new
Supplemental Administrative Agent.

                                    ARTICLE X
                                  MISCELLANEOUS

          10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and the Borrower or the applicable Loan Party, as
the case may be, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:

          (a) extend or increase the Commitment of any Lender without the
     written consent of each Lender directly affected thereby (it being
     understood that a waiver of any Event of Default, mandatory prepayment or
     mandatory reduction of the Commitments shall not constitute an extension or
     increase of any Commitment of any Lender);

          (b) postpone any date scheduled for any payment of principal or
     interest under Section 2.04 or 2.05 without the written consent of each
     Lender directly affected thereby, it being understood that the waiver of
     any mandatory prepayment of the Term Loans shall not constitute a
     postponement of any date scheduled for the payment of principal or
     interest;

          (c) reduce the principal of, or the rate of interest specified herein
     on any Term Loan, or (subject to clause (i) of the second proviso to this
     Section 10.01) any fees or other amounts payable hereunder or under any
     other Loan Document without the written consent of each Lender directly
     affected thereby; provided, however, that only the consent of the Required
     Lenders shall be necessary to amend the definition of "Default Rate" or to
     waive any obligation of the Borrower to pay interest at the Default Rate;

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          (d) change any provision of this Section 10.01 or the definition of
     "Required Lenders" without the written consent of each Lender;

          (e) other than in connection with a transaction permitted under
     Section 7.04 or 7.05, release all or substantially all of the value of the
     Guaranty, without the written consent of each Lender;

and provided, further that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of, or any fees or other amounts
payable to, the Administrative Agent under this Agreement or any other Loan
Document; and (ii) Section 10.07(g) may not be amended, waived or otherwise
modified without the consent of each Granting Lender all or any part of whose
Term Loans are being funded by an SPC at the time of such amendment, waiver or
other modification. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender (it being understood
that any Commitments or Term Loans held or deemed held by, any Defaulting Lender
shall be excluded for a vote of the Lenders hereunder requiring any consent of
the Lenders).

          10.02 Notices and Other Communications; Facsimile Copies. (a) General.
Unless otherwise expressly provided herein, all notices and other communications
provided for hereunder or any other Loan Document shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to Section
10.02(c)) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

          (i) if to the Borrower or the Administrative Agent, to the address,
     facsimile number, electronic mail address or telephone number specified for
     such Person on Schedule 10.02 or to such other address, facsimile number,
     electronic mail address or telephone number as shall be designated by such
     party in a notice to the other parties; and

          (ii) if to any other Lender, to the address, facsimile number,
     electronic mail address or telephone number specified in its Administrative
     Questionnaire or to such other address, facsimile number, electronic mail
     address or telephone number as shall be designated by such party in a
     notice to the Borrower and the Administrative Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four (4) Business Days
after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when
sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of Section
10.02(c)), when delivered; provided, however, that notices and other
communications to the Administrative Agent pursuant to Article II shall not be
effective until actually received by such Person. In no event shall a voicemail
message be effective as a notice, communication or confirmation hereunder.

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          (b) Effectiveness of Facsimile Documents and Signatures. Loan
Documents may be transmitted and/or signed by facsimile. The effectiveness of
any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, the Agents and the Lenders. The Administrative Agent may also
require that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.

          (c) Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 6.02, and to
distribute Loan Documents for execution by the parties thereto, and may not be
used for any other purpose.

          (d) Reliance by Agents and Lenders. The Administrative Agent and the
Lenders shall be entitled to rely and act upon any notices (including telephonic
Committed Loan Notices) purportedly given by or on behalf of the Borrower even
if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein,
or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify each Agent-Related Person and
each Lender from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower in the absence of gross negligence or willful misconduct. All
telephonic notices to the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

          10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Law.

          10.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Administrative Agent for all reasonable costs and expenses
incurred in connection with the preparation, negotiation, syndication and
execution of this Agreement and the other Loan Documents, and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs of Shearman & Sterling LLP, and (b) to pay
or reimburse the Administrative Agent and each Lender for all reasonable costs
and expenses incurred in connection with the enforcement of any rights or
remedies under this Agreement or the other Loan Documents (including all such
costs and expenses incurred during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs of counsel
to the Administrative Agent). The foregoing costs and expenses shall include all
out-of-pocket expenses incurred by any Agent. All amounts due under this Section
10.04 shall be paid within

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twenty (20) Business Days after invoiced or demand therefor. The agreements in
this Section shall survive the termination of the Commitments and repayment of
all other Obligations. If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it hereunder or under any Loan Document,
such amount may be paid on behalf of such Loan Party by the Administrative
Agent, in its sole discretion.

          10.05 Indemnification by the Borrower. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and, in the case of any funds,
trustees and advisors and attorneys-in-fact (collectively the "Indemnitees")
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and
disbursements (including Attorney Costs (which shall be limited to one (1)
counsel to the Administrative Agent and the Lenders, unless (x) the interests of
the Administrative Agent and the Lenders are sufficiently divergent, in which
case one (1) additional counsel may be appointed, and (y) if the interest of any
Lender or group of Lenders (other than all of the Lenders) are distinctly or
disproportionately affected, one (1) additional counsel for such Lender or group
of Lenders)) of any kind or nature whatsoever which may at any time be imposed
on, incurred by or asserted against any such Indemnitee in any way relating to
or arising out of or in connection with (a) the execution, delivery,
enforcement, performance or administration of any Loan Document or any other
agreement, letter or instrument delivered in connection with the transactions
contemplated thereby or the consummation of the transactions contemplated
thereby, (b) any Commitment, Term Loan or the use or proposed use of the
proceeds therefrom, or (c) any actual or alleged presence or release of
Hazardous Materials on or from any property currently or formerly owned or
operated by the Borrower, any Subsidiary or any other Loan Party, or any
Environmental Liability related in any way to the Borrower, any Subsidiary or
any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"), in all cases, whether
or not caused by or arising, in whole or in part, out of the negligence of the
Indemnitee; provided, that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee or breach of the Loan Documents by such
Indemnitee. No Indemnitee shall be liable for any damages arising from the use
by others of any information or other materials obtained through IntraLinks or
other similar information transmission systems in connection with this
Agreement, nor shall any Indemnitee or any Loan Party have any liability for any
special, punitive, indirect or consequential damages relating to this Agreement
or any other Loan Document or arising out of its activities in connection
herewith or therewith (whether before or after the Closing Date). In the case of
an investigation, litigation or other proceeding to which the indemnity in this
Section 10.05 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnitee or any other Person,
whether or not any Indemnitee is otherwise a party thereto and whether or not
any of the transactions contemplated hereunder or under any of

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the other Loan Documents is consummated. All amounts due under this Section
10.05 shall be payable within twenty (20) Business Days after demand therefor.
The agreements in this Section shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.

          10.06 Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower is made to any Agent or any Lender, or any Agent or any
Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by such Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
severally agrees to pay to the Administrative Agent upon demand its applicable
share of any amount so recovered from or repaid by any Agent, plus interest
thereon from the date of such demand to the date such payment is made at a rate
per annum equal to the Federal Funds Rate from time to time in effect.

          10.07 Successors and Assigns. (a) 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, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of Section 10.07(b), (ii) by
way of participation in accordance with the provisions of Section 10.07(d),
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of Section 10.07(f) or (iv) to an SPC in accordance with the
provisions of Section 10.07(g) (and any other attempted assignment or transfer
by any party hereto 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,
Participants to the extent provided in Section 10.07(d) and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

          (b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Term Loans at the time
owing to it); provided, that (i) except in the case of an assignment of the
entire remaining amount of the assigning Lender's Commitment and the Term Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Term Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the outstanding principal balance of the Term Loan of the assigning Lender
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of
the Trade Date, shall not be less than $1,000,000, unless each of the
Administrative Agent and, so long as no Event of Default in respect of Section
8.01(a) or (f) has occurred and is continuing, the Borrower

                                       86



otherwise consents (each such consent not to be unreasonably withheld or
delayed); (ii) 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 with respect to the Term Loans or the Commitment assigned; (iii)
the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500 (except, in the case of contemporaneous assignments by any Lender
to one or more Approved Funds, only a single processing and recording fee shall
be payable for such assignments); and (iv) the assigning Lender shall deliver
any Notes evidencing such Term Loans to the Borrower or the Administrative
Agent. Subject to acceptance and recording thereof by the Administrative Agent
pursuant to Section 10.07(c), from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, 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 Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption 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 3.01, 3.04, 3.05, 10.04 and 10.05
with respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, and the surrender by the assigning Lender of its
Note, the Borrower (at its expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this clause (b) 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 Section 10.07(d).

          (c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts (and related interest amounts) of the Term Loans owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, absent manifest error, and the
Borrower, the Agents and the Lenders shall 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, any Agent and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

          (d) Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or Highland Capital Management, L.P. or any of its
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Term 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 Agents 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

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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,
waiver or other modification described in the first proviso to Section 10.01
that directly affects such Participant. Subject to Section 10.07(e), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.07(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.09 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.10 as though it were a Lender.

          (e) A Participant shall not be entitled to receive any greater payment
under Section 3.01, 3.04 or 3.05 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 shall not be entitled to the
benefits of Section 3.01 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 10.15 as though it were a Lender.

          (f) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its Note,
if any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided, that no such pledge
or assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto and no
Lender may pledge all or part of its rights to Highland Capital Management, L.P.
or any its Affiliates or Subsidiaries.

          (g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower (an "SPC") the option to provide all or
any part of any Term Loan that such Granting Lender would otherwise be obligated
to make pursuant to this Agreement; provided, that (i) nothing herein shall
constitute a commitment by any SPC to fund any Term Loan, and (ii) if an SPC
elects not to exercise such option or otherwise fails to make all or any part of
such Term Loan, the Granting Lender shall be obligated to make such Term Loan
pursuant to the terms hereof. Each party hereto hereby agrees that (i) neither
the grant to any SPC nor the exercise by any SPC of such option shall increase
the costs or expenses or otherwise increase or change the obligations of the
Borrower under this Agreement (including its obligations under Section 3.01 or
3.04), (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and (iii)
the Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the lender of record hereunder. The making of a Term Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Term Loan were made by such Granting Lender.
Notwithstanding anything to the contrary contained herein, any SPC may (i) with
notice to, but without prior consent of the Borrower and the Administrative
Agent and with the payment of a processing fee of $3,500, assign all or any
portion of its right to receive payment with respect to any Term Loan to the
Granting Lender and

                                       88



(ii) disclose on a confidential basis any non-public information relating to its
funding of Term Loans to any rating agency, commercial paper dealer or provider
of any surety or Guarantee or credit or liquidity enhancement to such SPC.

          (h) Notwithstanding anything to the contrary contained herein, any
Lender that is a Fund may create a security interest in all or any portion of
the Term Loans owing to it and the Note, if any, held by it to the trustee for
holders of obligations owed, or securities issued, by such Fund as security for
such obligations or securities, provided, that unless and until such trustee
actually becomes a Lender in compliance with the other provisions of this
Section 10.07, (i) no such pledge shall release the pledging Lender from any of
its obligations under the Term Loan Documents, (ii) such trustee shall not be
entitled to exercise any of the rights of a Lender under the Loan Documents even
though such trustee may have acquired ownership rights with respect to the
pledged interest through foreclosure or otherwise, and (iii) no Lender may
create a security interest in favor of Highland Capital Management, L.P. or any
of its Affiliates or Subsidiaries.

          10.08 Confidentiality. Each of the Agents and the Lenders agrees to
maintain the confidentiality of the Information, except that Information may be
disclosed (a) to its 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; (e) subject to
an agreement containing provisions substantially the same as those of this
Section 10.08 (or as may otherwise be reasonably acceptable to the Borrower), to
any Eligible Assignee of or Participant in, or any prospective Eligible Assignee
of or Participant in, any of its rights or obligations under this Agreement; (f)
with the consent of the Borrower; (g) to the extent such Information becomes
publicly available other than as a result of a breach of this Section 10.08; (h)
to any state, Federal or foreign authority or examiner (including the National
Association of Insurance Commissioners or any other similar organization)
regulating any Lender; or (i) to any rating agency when required by it (it being
understood that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information relating to the
Loan Parties received by it from such Lender). In addition, the Agents and the
Lenders may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to the Agents and the Lenders in connection with
the administration and management of this Agreement, the other Loan Documents,
the Commitments, and the Borrowing. For the purposes of this Section 10.08,
"Information" means all information received from any Loan Party relating to any
Loan Party or its business, other than any such information that is publicly
available to any Agent or any Lender prior to disclosure by any Loan Party other
than as a result of a breach of this Section 10.08; provided, that, in the case
of information received from a Loan Party 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 10.08 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. Notwithstanding anything (express or implied) herein
or in any other

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Loan Document to the contrary, "Information" shall not include, and the
Administrative Agent, each Lender and each Loan Party may disclose without
limitation of any kind, any information with respect to the "tax treatment" and
"tax structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby and thereby and all materials
of any kind (including opinions or other tax analyses) that are provided to the
Administrative Agent or such Lender or Loan Party relating to such tax treatment
and tax structure.

          10.09 Setoff. In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) 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 by,
and other Indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Obligations owing
to such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not such Agent or such Lender shall have
made demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or Indebtedness. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Administrative Agent and each Lender under this
Section 10.09 are in addition to other rights and remedies (including, without
limitation, other rights of setoff) that the Administrative Agent and such
Lender may have.

          10.10 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If any Agent or any
Lender shall receive interest in an amount that exceeds the Maximum Rate, the
excess interest shall be applied to the principal of the Term Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by an Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by applicable
Law, (a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.

          10.11 Counterparts. This Agreement and each other Loan Document may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Delivery
by telecopier of an executed counterpart of a signature page to this Agreement
and each other Loan Document shall be effective as delivery of an original
executed counterpart of this Agreement and such other Loan Document. The Agents
may also require that any such documents and signatures delivered by telecopier
be confirmed by a manually-signed original thereof; provided, that the failure
to

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request or deliver the same shall not limit the effectiveness of any document or
signature delivered by telecopier.

          10.12 Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided, that the inclusion of
supplemental rights or remedies in favor of the Agents or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.

          10.13 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by each Agent
and each Lender, regardless of any investigation made by any Agent or any Lender
or on their behalf and notwithstanding that any Agent or any Lender may have had
notice or knowledge of any Default at the time of the Borrowing, and shall
continue in full force and effect as long as any Term Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied.

          10.14 Severability. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby. The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

          10.15 Tax Forms. (a) (i) Each Lender and Agent that is not a "United
States person" within the meaning of Section 7701(a)(30) of the Code (each, a
"Foreign Lender") shall deliver to the Borrower and the Administrative Agent,
prior to receipt of any payment subject to withholding under the Code (or upon
accepting an assignment of an interest herein), two duly signed, properly
completed copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Lender and entitling it to an exemption from, or reduction of,
United States withholding tax on all payments to be made to such Foreign Lender
by the Borrower or any other Loan Party pursuant to this Agreement or any other
Loan Document) or IRS Form W-8ECI or any successor thereto (relating to all
payments to be made to such Foreign Lender by the Borrower or any other Loan
Party pursuant to this Agreement or any other Loan Document) or such other
evidence reasonably satisfactory to the Borrower and the Administrative Agent
that such Foreign Lender is entitled to an exemption from, or reduction of,
United States withholding tax, including any exemption pursuant to Section
881(c) of the Code, and in the case of a Foreign Lender claiming such an
exemption under Section 881(c) of the Code, a certificate that establishes in
writing to the Borrower and the Administrative Agent that such Foreign Lender is
not (i) a "bank" as defined in Section 881(c)(3)(A) of the Code, (ii) a
10-percent shareholder within the meaning of Section 871(h)(3)(B) of the Code,
and (iii) a controlled foreign corporation related to the Borrower with the
meaning of Section 864(d) of the Code. Thereafter

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and from time to time, each such Foreign Lender shall (A) promptly submit to the
Borrower and the Administrative Agent such additional duly completed and signed
copies of one or more of such forms or certificates (or such successor forms or
certificates as shall be adopted from time to time by the relevant United States
taxing authorities) as may then be available under then current United States
laws and regulations to avoid, or such evidence as is reasonably satisfactory to
the Borrower and the Administrative Agent of any available exemption from, or
reduction of, United States withholding taxes in respect of all payments to be
made to such Foreign Lender by the Borrower or other Loan Party pursuant to this
Agreement, or any other Loan Document, in each case, (1) on or before the date
that any such form, certificate or other evidence expires or becomes obsolete,
(2) after the occurrence of any event requiring a change in the most recent
form, certificate or evidence previously delivered by it to the Borrower and the
Administrative Agent and (3) from time to time thereafter if reasonably
requested by the Borrower or the Administrative Agent, and (B) promptly notify
the Borrower and the Administrative Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.

          (ii) Each Foreign Lender, to the extent it does not act or ceases to
act for its own account with respect to any portion of any sums paid or payable
to such Foreign Lender under any of the Loan Documents (for example, in the case
of a typical participation by such Foreign Lender), shall deliver to the
Borrower and the Administrative Agent on the date when such Foreign Lender
ceases to act for its own account with respect to any portion of any such sums
paid or payable, and at such other times as may be necessary in the
determination of the Borrower or the Administrative Agent (in either case, in
the reasonable exercise of its discretion), (A) two duly signed completed copies
of the forms or statements required to be provided by such Foreign Lender as set
forth above, to establish the portion of any such sums paid or payable with
respect to which such Foreign Lender acts for its own account that is not
subject to United States withholding tax, and (B) two duly signed completed
copies of IRS Form W-8IMY (or any successor thereto), together with any
information such Foreign Lender chooses to transmit with such form, and any
other certificate or statement of exemption required under the Code, to
establish that such Foreign Lender is not acting for its own account with
respect to a portion of any such sums payable to such Foreign Lender.

          (iii) The Borrower shall not be required to pay any additional amount
or any indemnity payment under Section 3.01 to (A) any Foreign Lender with
respect to any Taxes required to be deducted or withheld on the basis of the
information, certificates or statements of exemption such Lender transmits with
an IRS Form W-8IMY pursuant to this Section 10.15(a), (B) any Foreign Lender if
such Foreign Lender shall have failed to satisfy the foregoing provisions of
this Section 10.15(a), or (C) any U.S. Lender if such U.S. Lender shall have
failed to satisfy the provisions of Section 10.15(b); provided, that if such
Lender shall have satisfied the requirement of this Section 10.15(a) or Section
10.15(b), as applicable, on the date such Lender became a Lender or ceased to
act for its own account with respect to any payment under any of the Loan
Documents, nothing in this Section 10.15(a) or Section 10.15(b) shall relieve
the Borrower of its obligation to pay any amounts pursuant to Section 3.01 in
the event that, as a result of any change in any applicable Law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender or other Person for the account of which
such Lender receives any sums

                                       92



payable under any of the Loan Documents is not subject to withholding or is
subject to withholding at a reduced rate.

          (iv) The Administrative Agent may deduct and withhold any taxes
required by any Laws to be deducted and withheld from any payment under any of
the Loan Documents.

          (b) Each Lender and Agent that is a "United States person" within the
meaning of Section 7701(a)(30) of the Code (each, a "U.S. Lender") shall deliver
to the Administrative Agent and the Borrower two duly signed, properly completed
copies of IRS Form W-9 on or prior to the Closing Date (or on or prior to the
date it becomes a party to this Agreement), certifying that such U.S. Lender is
entitled to an exemption from United States backup withholding tax, or any
successor form. If such U.S. Lender fails to deliver such forms, then the
Administrative Agent may withhold from any payment to such U.S. Lender an amount
equivalent to the applicable backup withholding tax imposed by the Code.

          (c) If any Governmental Authority asserts that the Borrower or the
Administrative Agent did not properly withhold or backup withhold, as the case
may be, any tax or other amount from payments made to or for the account of any
Foreign Lender or U.S. Lender, such Foreign Lender or U.S. Lender shall
indemnify the Borrower and the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Borrower and the Administrative Agent under this Section 10.15,
and costs and expenses (including Attorney Costs) of the Borrower and the
Administrative Agent. The obligation of the Foreign Lenders or U.S. Lenders
under this Section 10.15 shall survive the termination of the Commitments,
repayment of all other Obligations hereunder and the resignation of the
Administrative Agent.

          10.16 Governing Law. (a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, the LAW OF THE STATE OF
NEW YORK.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, EACH
Agent AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, EACH Agent AND
EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

          10.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN

                                       93



DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.17
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

          10.18 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent shall have
been notified by each Lender that each such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders except as
provided in Section 7.04.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                       94



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

                                    THL FOOD PRODUCTS CO.


                                    By: /s/ John D. Reedy
                                        ----------------------------------------
                                    Name: John D. Reedy
                                    Title: Chief Financial Officer and Treasurer


                                    THL FOOD PRODUCTS HOLDING CO.


                                    By: /s/ John D. Reedy
                                        ----------------------------------------
                                    Name: John D. Reedy
                                    Title: Chief Financial Officer and Treasurer



                                    BANK OF AMERICA, N.A., as
                                    Administrative Agent


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name: Illegible
                                    Title:


                                    BANK OF AMERICA, N.A., as a Lender


                                    By: /s/ Illegible
                                        ---------------------------------------
                                    Name: Illegible
                                    Title:



                                    DEUTSCHE BANK SECURITIES INC.,
                                    as Co-Syndication Agent


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name: Illegible
                                    Title: Managing Director


                                    By: /s/ Illegible
                                        ----------------------------------------
                                    Name: Illegible
                                    Title: Managing Director



                                    UBS SECURITIES LLC,
                                    as Co-Syndication Agent


                                    By: /s/ John C. Crockett
                                        ----------------------------------------
                                    Name: John C. Crockett
                                    Title: Director



                                    LENDER

                                    KZH SOLEIL-2 LLC


                                    By: /s/ Dorian Herrera
                                        ----------------------------------------
                                    Name: Dorian Herrera
                                    Title: Authorized Agent



                                                                       EXHIBIT B

                                FORM OF TERM NOTE

                                                                     -----------

          FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to                       or registered assigns (the "Lender"), in
          ---------------------
accordance with the provisions of the Agreement (as hereinafter defined), the
aggregate unpaid principal amount of each Term Loan made by the Lender to the
Borrower under that certain Senior Unsecured Term Loan Agreement, dated as of
November [  ],2003 (as amended, restated, extended, supplemented or otherwise
          --
modified in writing from time to time, the "Agreement;" the terms defined
therein being used herein as therein defined), among the Borrower, Holdings, the
Lenders from time to time party thereto, Bank of America, N.A., as
Administrative Agent, and the other Agents named therein.

          The Borrower promises to pay interest on the aggregate unpaid
principal amount of each Term Loan made by the Lender to the Borrower under the
Agreement from the date of such Term Loan until such principal amount is paid in
full, at such interest rates and at such times as provided in the Agreement. All
payments of principal and interest shall be made to the Administrative Agent for
the account of the Lender in Dollars in immediately available funds at the
Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Agreement.

          This Note is one of the Notes referred to in the Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty. Upon the occurrence and continuation of one or more of
the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Term Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Term Loans and
payments with respect thereto.

          The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]



          THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

                                        MICHAEL FOODS, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                              ----------------------------------

                                       2



                     LOANS AND PAYMENTS WITH RESPECT THERETO

                                            Amount of     Outstanding
        Type of    Amount of    End of     Principal or    Principal
       Term Loan   Term Loan   Interest   Interest Paid     Balance     Notation
Date      Made        Made      Period      This Date      This Date     Made By
- ----   ---------   ---------   --------   -------------   -----------   --------

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                                                                     EXHIBIT E-1

                             FORM OF PARENT GUARANTY

          PARENT GUARANTY dated as of Dated as of November 20, 2003 (the
"Guaranty") made by THL FOOD PRODUCTS HOLDING CO., a Delaware corporation (the
"Guarantor"), in favor of the Lender Parties (as defined in the Credit Agreement
referred to below).

                              PRELIMINARY STATEMENT

          THL Food Products Co., a Delaware corporation (the "Borrower"), and a
wholly owned subsidiary of the Guarantor, is party to a Senior Unsecured Term
Loan Agreement dated as of November 20, 2003 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement";
the capitalized terms defined therein and not otherwise defined herein being
used herein as therein defined) with the Guarantor, certain Lenders party
thereto, Bank of America, N.A., as the Administrative Agent, and the other
Agents named therein. The Guarantor will derive substantial direct and indirect
benefits from the transactions contemplated by the Credit Agreement. It is a
condition precedent to the making of Term Loans by the Lenders under the Credit
Agreement that the Guarantor shall have executed and delivered this Guaranty.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Term Loans, the Guarantor hereby agrees as follows:

          Section 1. Guaranty. (a) The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment, whether at
scheduled maturity or by acceleration, demand or otherwise, of all Obligations
of each other Loan Party now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premiums, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses incurred by the
Administrative Agent or any other Lender (the Administrative Agent and the
Lenders are herein collectively referred to as the "Lender Parties", and
individually, each a "Lender Party") in enforcing any rights under this Guaranty
or any other Loan Document (including reasonable fees, expenses and
disbursements of any law firm or other external counsel to the Administrative
Agent). Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to any Lender Party under
or in respect of the Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Loan Party.

          (b) The Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Lender Party under
this Guaranty or the Subsidiary Guaranty or any other guaranty, the Guarantor
will contribute, to the maximum extent



permitted by law, such amounts to each other guarantor so as to maximize the
aggregate amount paid to the Lender Parties under or in respect of the Loan
Documents.

          Section 2. Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender Party with respect thereto. The Obligations of the Guarantor under or in
respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and the Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

          (a) any lack of validity or enforceability of any Loan Document or any
     agreement or instrument relating thereto;

          (b) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Guaranteed Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents, or any other amendment or waiver of or any consent to departure
     from any Loan Document, including, without limitation, any increase in the
     Guaranteed Obligations resulting from the extension of additional credit to
     any Loan Party or any of its Subsidiaries or otherwise;

          (c) any taking, release or amendment or waiver of, or consent to
     departure from, any other guaranty, for all or any of the Guaranteed
     Obligations;

          (d) any change, restructuring or termination of the corporate
     structure or existence of any Loan Party or any of its Subsidiaries;

          (e) any failure of any Lender Party to disclose to any Loan Party any
     information relating to the business, condition (financial or otherwise),
     operations, performance, properties or prospects of any other Loan Party
     now or hereafter known to such Lender Party (the Guarantor waiving any duty
     on the part of the Lender Parties to disclose such information);

          (f) the failure of any other Person to execute or deliver any other
     guaranty or agreement or the release or reduction of liability of any other
     guarantor or surety with respect to the Guaranteed Obligations; or

          (g) any other circumstance or any existence of or reliance on any
     representation by any Lender Party that might otherwise constitute a
     defense available to, or a discharge of, any Loan Party or any other
     guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by

                                       2



any Lender Party or any other Person upon the insolvency, bankruptcy or
reorganization of the Borrower or any other Loan Party or otherwise, all as
though such payment had not been made.

          Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Lender Party protect or insure any Lien or exhaust any right or take any action
against any Loan Party or any other Person.

          (b) The Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.

          (c) The Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Lender Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of the Guarantor or other rights of the
Guarantor to proceed against any of the other Loan Parties, any other guarantor
or any other Person and (ii) any defense based on any right of set-off or
counterclaim against or in respect of the Obligations of the Guarantor
hereunder.

          (d) The Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Lender Party to disclose to the Guarantor any matter,
fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party or any
of its Subsidiaries now or hereafter known by such Lender Party.

          (e) The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.

          Section 4. Subrogation. The Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower, any other Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantor's Obligations under or in respect of this Guaranty or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Lender Party against the Borrower, any
other Loan Party or any other insider guarantor, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from the Borrower,
any other Loan Party or any other insider guarantor, directly or indirectly, in
cash or other property or by set-off or in any other manner, payment or security
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash and the Commitments shall have expired or been
terminated. If any amount shall be paid to the Guarantor in violation of the
immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash

                                       3



of the Guaranteed Obligations and all other amounts payable under this Guaranty
and (b) the Maturity Date, such amount shall be received and held in trust for
the benefit of the Lender Parties, shall be segregated from other property and
funds of the Guarantor and shall forthwith be paid or delivered to the
Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
in trust for the benefit of the Lender Parties in respect of any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) the Guarantor shall make payment to any Lender Party of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash and
(iii) the Maturity Date shall have occurred, the Lender Parties will, at the
Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment made by the
Guarantor pursuant to this Guaranty.

          Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all
payments by the Guarantor under this Guaranty or any other Loan Document shall
be made, in accordance with the terms of the Credit Agreement, free and clear of
and without deduction for any and all present or future Taxes.

          Section 6. Representations and Warranties. The Guarantor hereby makes
each representation and warranty made in the Loan Documents by the Borrower with
respect to the Guarantor and the Guarantor hereby further represents and
warrants as follows:

          (a) There are no conditions precedent to the effectiveness of this
     Guaranty that have not been satisfied or waived.

          (b) The Guarantor has, independently and without reliance upon any
     Lender Party and based on such documents and information as it has deemed
     appropriate, made its own credit analysis and decision to enter into this
     Guaranty and each other Loan Document to which it is or is to be a party,
     and the Guarantor has established adequate means of obtaining from each
     other Loan Party on a continuing basis information pertaining to, and is
     now and on a continuing basis will be completely familiar with, the
     business, condition (financial or otherwise), operations, performance,
     properties and prospects of such other Loan Party.

          Section 7. Covenants. The Guarantor covenants and agrees that, so long
as any part of the Guaranteed Obligations shall remain unpaid, the Guarantor
will perform and observe, and cause the Borrower and each of its Subsidiaries to
perform and observe, all of the terms, covenants and agreements set forth in the
Loan Documents on its or their part to be performed or observed or that the
Borrower has agreed to cause its Subsidiaries to perform or observe.

          Section 8. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty and no consent to any departure by the Guarantor therefrom shall
in any event be

                                       4



effective unless the same shall be in writing and signed by the Administrative
Agent, the Required Lenders and the Guarantor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all of the Lender Parties (other than any Lender
that is, at such time, a Defaulting Lender), (a) reduce or limit the obligations
of the Guarantor hereunder, release the Guarantor hereunder or otherwise limit
the Guarantor's liability with respect to the Obligations owing to the Lender
Parties under or in respect of the Loan Documents, (b) postpone any date fixed
for payment hereunder or (c) change any provision of this Section 8.

          Section 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication or facsimile transmission) and mailed, telegraphed, telecopied,
telexed, faxed or delivered to it, if to the Guarantor, addressed to it in care
of the Borrower at the Borrower's address specified in Section 10.02 of the
Credit Agreement, if to any Agent or any Lender, at its address specified in
Section 10.02 of the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall be deemed to be given or
made at such time as shall be set forth in Section 10.02 of the Credit
Agreement. Delivery by telecopier of an executed counterpart of a signature page
to any amendment or waiver of any provision of this Guaranty shall be effective
as delivery of an original executed counterpart thereof.

          Section 10. No Waiver; Remedies. No failure on the part of any Lender
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

          Section 11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 8.02 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of said Section 8.02, each Agent and each Lender and each of
their respective 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 indebtedness at any time owing by such Agent, such Lender or such
Affiliate to or for the credit or the account of the Guarantor against any and
all of the Obligations of the Guarantor now or hereafter existing under the Loan
Documents, irrespective of whether such Agent or such Lender shall have made any
demand under this Guaranty or any other Loan Document and although such
Obligations may be unmatured. Each Agent and each Lender agrees promptly to
notify the Guarantor after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Agent and each Lender and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Agent, such Lender and their respective Affiliates may have.

                                       5



          Section 12. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
(ii) the Maturity Date and (b) be binding upon the Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Lender Parties
and their successors, transferees and assigns. Without limiting the generality
of clause (c) of the immediately preceding sentence, any Lender Party may assign
or otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitments, the Term Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as and to the extent provided in Section 10.07 of the Credit
Agreement. The Guarantor shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lender Parties.

          Section 13. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

          Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO.

          (c) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, CLAIM, DEMAND OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.

                                       6



          IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                        THL FOOD PRODUCTS HOLDING CO.


                                        By
                                           -------------------------------------
                                           Title: Chief Financial Officer and
                                                  Treasurer



                                                                     EXHIBIT E-2

                           FORM OF SUBSIDIARY GUARANTY

          SUBSIDIARY GUARANTY dated as of November 20, 2003 (the "Guaranty")
made by the Persons listed on the signature pages hereof under the caption
"Subsidiary Guarantors" and the Additional Guarantors (as defined in Section
8(b)) (such Persons so listed and the Additional Guarantors being, collectively,
the "Guarantors" and, individually, each a "Guarantor") in favor of the Lender
Parties (as defined in the Credit Agreement referred to below).

                              PRELIMINARY STATEMENT

          THL Food Products Co., a Delaware corporation (the "Borrower"), is
party to a Senior Unsecured Term Loan Agreement dated as of November 20, 2003
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"; the capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined) with THL Food
Products Holding Co., certain Lenders party thereto, Bank of America, N.A., as
the Administrative Agent, and the other Agents named therein. Each Guarantor may
receive, directly or indirectly, a portion of the proceeds of the Term Loans
under the Credit Agreement and will derive substantial direct and indirect
benefits from the transactions contemplated by the Credit Agreement. It is a
condition precedent to the making of Term Loans by the Lenders under the Credit
Agreement from time to time that each Guarantor shall have executed and
delivered this Guaranty.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Term Loans under the Credit Agreement from time to
time, each Guarantor, jointly and severally with each other Guarantor, hereby
agrees as follows:

          Section 15. Guaranty; Limitation of Liability. (a) Each Guarantor
hereby, jointly and severally, absolutely, unconditionally and irrevocably
guarantees the punctual payment, whether at scheduled maturity or by
acceleration, demand or otherwise, of all Obligations of each other Loan Party
now or hereafter existing under or in respect of the Loan Documents (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premiums,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
expenses incurred by the Administrative Agent or any other Lender (the
Administrative Agent and the Lenders are herein collectively referred to as the
"Lender Parties", and individually, each a "Lender Party") in enforcing any
rights under this Guaranty or any other Loan Document (including reasonable
fees, expenses and disbursements of any law firm or other external counsel to
the Administrative Agent). Without limiting the generality of the foregoing,
each Guarantor's liability shall extend to all amounts that constitute part of
the Guaranteed Obligations and would be owed by any other Loan Party to any
Lender Party under or in respect of the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.



          (b) Each Guarantor, and by its acceptance of this Guaranty, the
Administrative Agent and each other Lender, hereby confirms that it is the
intention of all such Persons that this Guaranty and the Obligations of each
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Administrative Agent, the other Lenders and the Guarantors hereby
irrevocably agree that the Obligations of each Guarantor under this Guaranty at
any time shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "Bankruptcy Law" means any
proceeding of the type referred to in Section 8.01(f) of the Credit Agreement or
Title 11, U.S. Code, or any similar foreign, federal or state law for the relief
of debtors.

          (c) Each Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Lender Party under
this Guaranty or the Parent Guaranty or any other guaranty, such Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Guarantor and Holdings so as to maximize the aggregate amount paid to the Lender
Parties under or in respect of the Loan Documents.

          Section 16. Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender Party with respect thereto. The Obligations of each Guarantor under or in
respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

          (a) any lack of validity or enforceability of any Loan Document or any
     agreement or instrument relating thereto;

          (b) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Guaranteed Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents, or any other amendment or waiver of or any consent to departure
     from any Loan Document, including, without limitation, any increase in the
     Guaranteed Obligations resulting from the extension of additional credit to
     any Loan Party or any of its Subsidiaries or otherwise;

          (c) any taking, release or amendment or waiver of, or consent to
     departure from, any other guaranty, for all or any of the Guaranteed
     Obligations;

                                       2



          (d) any change, restructuring or termination of the corporate
     structure or existence of any Loan Party or any of its Subsidiaries;

          (e) any failure of any Lender Party to disclose to any Loan Party any
     information relating to the business, condition (financial or otherwise),
     operations, performance, properties or prospects of any other Loan Party
     now or hereafter known to such Lender Party (each Guarantor waiving any
     duty on the part of the Lender Parties to disclose such information);

          (f) the failure of any other Person to execute or deliver this
     Guaranty, any Guaranty Supplement (as hereinafter defined) or any other
     guaranty or agreement or the release or reduction of liability of any
     Guarantor or other guarantor or surety with respect to the Guaranteed
     Obligations; or

          (g) any other circumstance or any existence of or reliance on any
     representation by any Lender Party that might otherwise constitute a
     defense available to, or a discharge of, any Loan Party or any other
     guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Lender Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made.

          Section 17. Waivers and Acknowledgments. (a) Each Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Lender Party protect or insure any Lien or exhaust any right or take any action
against any Loan Party or any other Person.

          (b) Each Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.

          (c) Each Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Lender Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights of such
Guarantor to proceed against any of the other Loan Parties, any other guarantor
or any other Person and (ii) any defense based on any right of set-off or
counterclaim against or in respect of the Obligations of such Guarantor
hereunder.

          (d) Each Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Lender Party to disclose to such Guarantor any matter,
fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party or any
of its Subsidiaries now or hereafter known by such Lender Party.

                                       3



          (e) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in Section 2 and this Section 3
are knowingly made in contemplation of such benefits.

          Section 18. Subrogation. Each Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower, any other Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's Obligations under or in respect of this Guaranty or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Lender Party against the Borrower, any
other Loan Party or any other insider guarantor, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from the Borrower,
any other Loan Party or any other insider guarantor, directly or indirectly, in
cash or other property or by set-off or in any other manner, payment or security
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash and the Commitments shall have expired or been
terminated. If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and (b) the Maturity Date, such amount shall be
received and held in trust for the benefit of the Lender Parties, shall be
segregated from other property and funds of such Guarantor and shall forthwith
be paid or delivered to the Administrative Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held in trust for the benefit of the Lender Parties in
respect of any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If (i) any Guarantor shall make payment to any
Lender Party of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash and (iii) the Maturity Date shall have occurred,
the Lender Parties will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Guaranty.

          Section 19. Payments Free and Clear of Taxes, Etc. Any and all
payments by any Guarantor under this Guaranty or any other Loan Document shall
be made, in accordance with the terms of the Credit Agreement, free and clear of
and without deduction for any and all present or future Taxes.

          Section 20. Representations and Warranties. Each Guarantor hereby
makes each representation and warranty made in the Loan Documents by the
Borrower with respect to such Guarantor and each Guarantor hereby further
represents and warrants as follows:

                                       4



          (a) There are no conditions precedent to the effectiveness of this
     Guaranty that have not been satisfied or waived.

          (b) Such Guarantor has, independently and without reliance upon any
     Lender Party and based on such documents and information as it has deemed
     appropriate, made its own credit analysis and decision to enter into this
     Guaranty and each other Loan Document to which it is or is to be a party,
     and such Guarantor has established adequate means of obtaining from each
     other Loan Party on a continuing basis information pertaining to, and is
     now and on a continuing basis will be completely familiar with, the
     business, condition (financial or otherwise), operations, performance,
     properties and prospects of such other Loan Party.

          Section 21. Covenants. Each Guarantor covenants and agrees that, so
long as any part of the Guaranteed Obligations shall remain unpaid, such
Guarantor will perform and observe, and cause each of its Subsidiaries to
perform and observe, all of the terms, covenants and agreements set forth in the
Loan Documents on its or their part to be performed or observed or that the
Borrower has agreed to cause such Guarantor or such Subsidiaries to perform or
observe.

          Section 22. Amendments, Guaranty Supplements, Etc. (a) No amendment or
waiver of any provision of this Guaranty and no consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent, the Required Lenders and the
Guarantors and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all of the Lender Parties (other than any Lender that is, at such
time, a Defaulting Lender), (i) reduce or limit the obligations of any Guarantor
hereunder, release any Guarantor hereunder or otherwise limit any Guarantor's
liability with respect to the Obligations owing to the Lender Parties under or
in respect of the Loan Documents except as provided in the next succeeding
sentence, (ii) postpone any date fixed for payment hereunder or (iii) change any
provision of this Section 8. Upon the sale of a Guarantor to the extent
permitted in accordance with the terms of the Loan Documents, such Guarantor
shall be automatically released from this Guaranty.

          (b) Upon the execution and delivery by any Person of a guaranty
supplement in substantially the form of Exhibit A hereto (each, a "Guaranty
Supplement"), (i) such Person shall be referred to as an "Additional Guarantor"
and shall become and be a Guarantor hereunder, and each reference in this
Guaranty to a "Guarantor" shall also mean and be a reference to such Additional
Guarantor, and each reference in any other Loan Document to a "Subsidiary
Guarantor" shall also mean and be a reference to such Additional Guarantor, and
(ii) each reference herein to "this Guaranty", "hereunder", "hereof" or words of
like import referring to this Guaranty, and each reference in any other Loan
Document to the "Subsidiary Guaranty", "thereunder", "thereof" or words of like
import referring to this Guaranty, shall mean and be a reference to this
Guaranty as supplemented by such Guaranty Supplement.

          Section 23. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication or facsimile transmission) and mailed, telegraphed,
telecopied, telexed, faxed or delivered to it, if to

                                       5



any Guarantor, addressed to it in care of the Borrower at the Borrower's address
specified in Section 10.02 of the Credit Agreement, if to any Agent or any
Lender, at its address specified in Section 10.02 of the Credit Agreement, or,
as to any party, at such other address as shall be designated by such party in a
written notice to each other party. All such notices and other communications
shall be deemed to be given or made at such time as shall be set forth in
Section 10.02 of the Credit Agreement. Delivery by telecopier of an executed
counterpart of a signature page to any amendment or waiver of any provision of
this Guaranty or of any Guaranty Supplement to be executed and delivered
hereunder shall be effective as delivery of an original executed counterpart
thereof.

          Section 24. No Waiver; Remedies. No failure on the part of any Lender
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

          Section 25. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 8.02 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of said Section 8.02, each Agent and each Lender and each of
their respective 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 indebtedness at any time owing by such Agent, such Lender or such
Affiliate to or for the credit or the account of any Guarantor against any and
all of the Obligations of such Guarantor now or hereafter existing under the
Loan Documents, irrespective of whether such Agent or such Lender shall have
made any demand under this Guaranty or any other Loan Document and although such
Obligations may be unmatured. Each Agent and each Lender agrees promptly to
notify such Guarantor after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Agent and each Lender and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Agent, such Lender and their respective Affiliates may have.

          Section 26. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and the
Maturity Date and (b) be binding upon each Guarantor, its successors and assigns
and (c) inure to the benefit of and be enforceable by the Lender Parties and
their successors, transferees and assigns. Without limiting the generality of
clause (c) of the immediately preceding sentence, any Lender Party may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitments, the Term Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as and to the extent provided in Section 10.07 of the Credit
Agreement. No Guarantor shall have the right to

                                       6



assign its rights hereunder or any interest herein without the prior written
consent of the Lender Party.

          Section 27. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

          Section 28. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO.

          (c) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

                                       7



          IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                        MICHAEL FOODS OF DELAWARE, INC.


                                        By
                                           -------------------------------------
                                           Title: Executive Vice President,
                                                  Chief Financial Officer and
                                                  Treasurer


                                        CASA TRUCKING, INC.


                                        By
                                           -------------------------------------
                                           Title: Chief Financial Officer and
                                                  Vice President - Finance


                                        CRYSTAL FARMS REFRIGERATED DISTRIBUTION
                                        COMPANY


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance



                                        KMS DAIRY, INC.


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance


                                        MINNESOTA PRODUCTS, INC.


                                        By
                                           -------------------------------------
                                           Title: Chief Financial Officer and
                                                 Vice President - Finance


                                        NORTHERN STAR CO.


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance


                                        PAPETTI'S HYGRADE EGG PRODUCTS, INC.


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance


                                        M.G. WALDBAUM COMPANY


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance



                                        FARM FRESH FOODS, INC.


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance


                                        PAPETTI ELECTROHEATING CORPORATION


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance


                                        WFC, INC.


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance


                                        WISCO FARM COOPERATIVE


                                        By
                                           -------------------------------------
                                           Title: Vice President - Finance



                                                                       Exhibit A
                                                                          To The
                                                             Subsidiary Guaranty

                     FORM OF SUBSIDIARY GUARANTY SUPPLEMENT

                                                                          ,
                                                              --------- --  ----

Bank of America, N.A., as Administrative Agent
[Address of Administrative Agent]

Attention:
           ---------

          Senior Unsecured Term Loan Agreement (the "Credit Agreement")
                       dated as of November 20, 2003 among
         THL Food Products Co., a Delaware corporation (the "Borrower"),
                         THL Food Products Holding Co.,
                   the Lenders party to the Credit Agreement,
                             Bank of America, N.A.,
                          as the Administrative Agent,
               and the other Agents party to the Credit Agreement

Ladies and Gentlemen:

          Reference is made to the above-captioned Credit Agreement and to the
Subsidiary Guaranty referred to therein (such Subsidiary Guaranty, as in effect
on the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, together with this Subsidiary Guaranty Supplement
(the "Guaranty Supplement"), being the "Subsidiary Guaranty"). The capitalized
terms defined in the Subsidiary Guaranty or in the Credit Agreement and not
otherwise defined herein are used herein as therein defined.

          Section 1. Guaranty; Limitation of Liability. (a) The undersigned
hereby, jointly and severally with the other Guarantors absolutely,
unconditionally and irrevocably guarantees the punctual payment, whether at
scheduled maturity or by acceleration, demand or otherwise, of all Obligations
of each other Loan Party now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premium, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Lender (the Administrative Agent and the Lenders are herein
collectively referred to as the "Lender Parties", and individually, each a
"Lender Party") in enforcing any rights under this Guaranty Supplement, the
Subsidiary Guaranty or any other Loan Document. Without limiting the generality
of the foregoing, the undersigned's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Loan Party to any Lender Party under or in respect of the Loan Documents but for
the fact that they are



unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.

          (b) The undersigned, and by its acceptance of this Guaranty
Supplement, the Administrative Agent and each other Lender Party, hereby
confirms that it is the intention of all such Persons that this Guaranty
Supplement, the Subsidiary Guaranty and the Obligations of the undersigned
hereunder and thereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar foreign, federal or state law to the
extent applicable to this Guaranty Supplement, the Subsidiary Guaranty and the
Obligations of the undersigned hereunder and thereunder. To effectuate the
foregoing intention, the Administrative Agent, the other Lender Parties and the
undersigned hereby irrevocably agree that the Obligations of the undersigned
under this Guaranty Supplement and the Subsidiary Guaranty at any time shall be
limited to the maximum amount as will result in the Obligations of the
undersigned under this Guaranty Supplement and the Subsidiary Guaranty not
constituting a fraudulent transfer or conveyance.

          (c) The undersigned hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Lender Party under
this Guaranty Supplement, the Subsidiary Guaranty, the Parent Guaranty or any
other guaranty, the undersigned will contribute, to the maximum extent permitted
by applicable law, such amounts to each other Guarantor and each other guarantor
so as to maximize the aggregate amount paid to the Lender Parties under or in
respect of the Loan Documents.

          Section 2. Obligations Under the Guaranty. The undersigned hereby
agrees, as of the date first above written, to be bound as a Guarantor by all of
the terms and conditions of the Subsidiary Guaranty to the same extent as each
of the other Guarantors thereunder. The undersigned further agrees, as of the
date first above written, that each reference in the Subsidiary Guaranty to an
"Additional Guarantor" or a "Guarantor" shall also mean and be a reference to
the undersigned, and each reference in any other Loan Document to a "Subsidiary
Guarantor" or a "Loan Party" shall also mean and be a reference to the
undersigned.

          Section 3. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 6 of the Subsidiary
Guaranty to the same extent as each other Guarantor.

          Section 4. Delivery by Telecopier. Delivery of an executed counterpart
of a signature page to this Guaranty Supplement by telecopier shall be effective
as delivery of an original executed counterpart of this Guaranty Supplement.

          Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
This Guaranty Supplement shall be governed by, and construed in accordance with,
the laws of the State of New York.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
SUCH STATE, AND BY



EXECUTION AND DELIVERY OF THIS GUARANTY SUPPLEMENT, EACH GUARANTOR CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO.

          (c) THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED THERETO.

                                        Very truly yours,

                                        [NAME OF ADDITIONAL GUARANTOR]


                                        By
                                           -------------------------------------
                                           Title:



                                                                       EXHIBIT G

                          FORM OF ASSUMPTION AGREEMENT

          ASSUMPTION AGREEMENT, dated as of November 20, 2003, made by Michael
Foods, Inc., a Delaware corporation (formerly known as M-Foods Holdings, Inc.,
"Michael Foods"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (in
such capacity, the "Administrative Agent") for the banks and other financial
institutions or entities (the "Lenders") parties to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the
meanings given to them in such Credit Agreement.

                              W I T N E S S E T H:

          WHEREAS, THL Food Products Co., a Delaware corporation (the
"Company"), THL Food Products Holding Co., a Delaware corporation ("Holdings"),
the Lenders, the Administrative Agent, the other Agents named therein have
entered into the Credit Agreement dated as of November 20, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");

          WHEREAS, simultaneously herewith, pursuant to the Agreement and Plan
of Merger dated as of October 10, 2003 (the "Merger Agreement") between
Holdings, the Company, M-Foods Investors, LLC, M-Foods Holdings, Inc. ("M-Foods
Holdings"), and certain other stockholders of M-Foods Holdings, the Company has
merged (the "First Merger") with and into M-Foods Holdings with M-Foods Holdings
being the surviving corporation (the "Surviving Corporation") and, immediately
thereupon, Michael Foods, Inc., a Minnesota corporation and wholly-owned direct
subsidiary of M-Foods Holdings ("MFI"), has merged (the "Second Merger", and
together with the First Merger, the "Mergers") with and into the Surviving
Corporation with the Surviving Corporation being the surviving corporation.
Thereafter the Surviving Corporation has changed its name to Michael Foods,
Inc., a Delaware corporation.

          WHEREAS, this Assumption Agreement is executed and delivered pursuant
to the Credit Agreement;

          NOW, THEREFORE, IT IS AGREED:

          1. Credit Agreement. By executing and delivering this Assumption
Agreement, Michael Foods hereby assumes all rights, title, interests,
obligations and liabilities of all and whatever nature of the Company under the
Credit Agreement and each of the other Loan Documents (in furtherance of and in
addition to, and not in lieu of, any assumption or deemed assumption by
operation of law) from and after the date hereof with the same force and effect
as if originally the "Borrower" under the Credit Agreement and, to the extent
the Company was a party thereto, each other Loan Document. Without limiting the
generality of the foregoing, Michael Foods hereby expressly agrees to observe
and perform and be bound by all of the terms, covenants, representations,
warranties, and agreements contained in the Credit Agreement and each other Loan
Document delivered thereunder which are binding upon, and to be observed or
performed by, the Borrower. Michael Foods hereby ratifies and confirms the
validity of, and all of its obligations and liabilities (including the
Obligations) under, the Credit Agreement and such other Loan Documents. Michael
Foods hereby represents and warrants that after giving effect to this Assumption
Agreement, each of the representations and warranties contained in Section 5 of
the Credit Agreement is true and correct in all material respects on and as of
the date hereof.



          2. Effect on the Credit Agreement and Loan Documents. On and after the
effectiveness of this Assumption Agreement, each reference in each of the Credit
Agreement and each other Loan Document to the "Borrower," or words to that
effect shall mean and be a reference to Michael Foods and Michael Foods shall be
the "Borrower" for all purposes of the Credit Agreement and the other Loan
Documents.

          3. Governing Law. This Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

          4. Loan Document. This Agreement shall constitute a Loan Document.

                                       5



          IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.

                                        MICHAEL FOODS, INC.
                                        (formerly known as M-Foods Holdings,
                                        Inc.)


                                        By:
                                            ------------------------------------
                                        Name: John D. Reedy
                                        Title: Chief Financial Officer and
                                               Treasurer

Acknowledged:

THL FOOD PRODUCTS HOLDING CO.


By:
    ---------------------------------
Name: John D. Reedy
Title: Chief Financial Officer and Treasurer


BANK OF AMERICA, N.A., as Administrative Agent


By:
    ---------------------------------
Name:

EX-12.1

                                                                    Exhibit 12.1

                               Michael Foods, Inc.
                Computation of ratio of earnings to fixed charges
                              For the Periods Ended



                                                     Predecessor                                      2001 Predecessor
                            -----------------------------------------------------------   ---------------------------------------
                                                                               Nine         Three
                            Nine months     Nine months                       Months        Months      Years ended December 31,
                               ended           ended        Year ended         ended        ended     ---------------------------
                            September 30,   September 30,   December 31,   December 31,   March 31,
                                2003            2002           2002            2001         2001        2000      1999      1998
                            -------------   -------------   ------------   ------------   ---------   -------   -------   -------
                                                                                                   
Earnings:
   Income before
      income taxes and
      extraordinary items      $40,071         $33,001        $ 48,204        $21,815      $ 6,201    $73,600   $74,666   $69,417
Add:
   Fixed charges                40,434          41,791          56,573         46,045        3,692     15,315    14,514    13,355
   Amortization of
      capitalized interest         429             429             572            429          143        572       572       572
Subtract:
   Interest capitalized             --              --              --           (196)          --       (224)   (1,054)   (1,048)
                               -------         -------        --------        -------      -------    -------   -------   -------
   Adjusted Earnings            80,934          75,221         105,349         68,093       10,036     89,263    88,698    82,296
                               =======         =======        ========        =======      =======    =======   =======   =======
   Fixed Charges:
      Interest expensed
         and capitalized        35,840          37,840          50,955         42,531        3,292     13,715    12,972    11,638
      Interest portion
         of rentals              1,035           1,050           1,400          1,155          375      1,500     1,442     1,617
      Amortization of
         capitalized debt
         expense                 3,559           2,901           4,218          2,359           25        100       100       100
                               -------         -------        --------        -------      -------    -------   -------   -------
                                40,434          41,791          56,573         46,045        3,692     15,315    14,514    13,355
                               =======         =======        ========        =======      =======    =======   =======   =======
   Ratio of earnings
      to fixed charges            2.00            1.80            1.86           1.48         2.72       5.83      6.11      6.16
                               =======         =======        ========        =======      =======    =======   =======   =======

EX-21.1

                                                                    EXHIBIT 21.1

SUBSIDIARIES OF MICHAEL FOODS, INC.

NAME                                                      STATE OF INCORPORATION
- ----                                                      ----------------------
Crystal Farms Refrigerated Distribution Company                        Minnesota
Northern Star Co.                                                      Minnesota
KMS Dairy, Inc.                                                        Minnesota
M.G. Waldbaum Company                                                   Nebraska
Papetti Electroheating Corporation                                    New Jersey
Papetii's Hygrade Egg Products, Inc.                                   Minnesota
Casa Trucking, Inc.                                                    Minnesota
Wisco Farm Cooperative                                                 Wisconsin
WFC, Inc.                                                              Wisconsin
Farm Fresh Foods, Inc.                                                    Nevada
Michael Foods of Delaware, Inc.                                         Delaware
Minnesota Products, Inc.                                               Minnesota
MFI Food Canada, Ltd.                                                    Ontario
MIKLFS Corporation                                                Virgin Islands
Trilogy Egg Products Inc.*                                                Canada

- ----------
* not wholly owned

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

EX-23.1

                                                                    EXHIBIT 23.1

               Consent of Independent Certified Public Accountants

We have issued our reports dated February 8, 2002 accompanying the consolidated
financial statements of Michael Foods, Inc. and subsidiaries (a wholly owned
subsidiary of M-Foods Holdings, Inc.), and May 15, 2001, (except for the third
paragraph of "Recent Accounting Pronouncements" within Note C, as to which the
date is February 18, 2003), accompanying the consolidated financial statements
of Michael Foods, Inc. and subsidiaries (the "Predecessor"). The aforementioned
reports are contained in the Registration Statement on Form S-4 and we hereby
consent to the use of the aforementioned reports in the Registration Statement.

/s/ GRANT THORNTON LLP


Minneapolis, Minnesota

February 11, 2004

EX-23.2

                                                                    EXHIBIT 23.2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-4 of
Michael Foods, Inc. of our report dated February 18, 2003, except for note K as
to which the date is November 20, 2003, relating to the financial statements of
Michael Foods, Inc., which appears in such Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.


/s/ PricewaterhouseCoopers LLP
- ------------------------------

Minneapolis Minnesota
February 11, 2004

EX-25.1

                                                                    EXHIBIT 25.1

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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   ----------

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE
                                   ----------

    CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
                               SECTION 305(b)(2)

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
               (Exact name of trustee as specified in its charter)

A U.S. National Banking Association                               41-1592157
 (Jurisdiction of incorporation or                            (I.R.S. Employer
organization if not a U.S. national                          Identification No.)
               bank)

Sixth Street and Marquette Avenue
Minneapolis, Minnesota                                             55479
(Address of principal executive offices)                         (Zip code)

                       Stanley S. Stroup, General Counsel
                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
                        Sixth Street and Marquette Avenue
                          Minneapolis, Minnesota 55479
                                 (612) 667-1234
                               (Agent for Service)

                                   ----------

                               MICHAEL FOODS, INC.
               (Exact name of obligor as specified in its charter)

          Delaware                                               41-0498850
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

      301 Carlson Parkway, Suite 400
           Minnetonka, Minnesota                                   55305
(Address of principal executive offices)                         (Zip code)

                                   ----------
                      8% Senior Subordinated Notes due 2013
                       (Title of the indenture securities)

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



Item 1. General Information. Furnish the following information as to the
        trustee:

          (a)  Name and address of each examining or supervising authority to
               which it is subject.

               Comptroller of the Currency
               Treasury Department
               Washington, D.C.

               Federal Deposit Insurance Corporation
               Washington, D.C.

               The Board of Governors of the Federal Reserve System
               Washington, D.C.

          (b)  Whether it is authorized to exercise corporate trust powers.

               The trustee is authorized to exercise corporate trust powers.

Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
        trustee, describe each such affiliation.

          None with respect to the trustee.

No responses are included for Items 3-14 of this Form T-1 because the obligor is
not in default as provided under Item 13.

Item 15. Foreign Trustee.    Not applicable.

Item 16. List of Exhibits.   List below all exhibits filed as a part of this
                             Statement of Eligibility.
                             Wells Fargo Bank incorporates by reference into
                             this Form T-1 the exhibits attached hereto.

          Exhibit 1.    a.   A copy of the Articles of Association of the
                             trustee now in effect.***

          Exhibit 2.    a.   A copy of the certificate of authority of the
                             trustee to commence business issued June 28, 1872,
                             by the Comptroller of the Currency to The
                             Northwestern National Bank of Minneapolis.*

                        b.   A copy of the certificate of the Comptroller of the
                             Currency dated January 2, 1934, approving the
                             consolidation of The Northwestern National Bank of
                             Minneapolis and The Minnesota Loan and Trust
                             Company of Minneapolis, with the surviving entity
                             being titled Northwestern National Bank and Trust
                             Company of Minneapolis.*

                        c.   A copy of the certificate of the Acting Comptroller
                             of the Currency dated January 12, 1943, as to
                             change of corporate title of Northwestern National
                             Bank and Trust Company of Minneapolis to
                             Northwestern National Bank of Minneapolis.*

                        d.   A copy of the letter dated May 12, 1983 from the
                             Regional Counsel, Comptroller of the Currency,
                             acknowledging receipt of notice of name change
                             effective May 1, 1983 from Northwestern National
                             Bank of Minneapolis to Norwest Bank Minneapolis,
                             National Association.*



                        e.   A copy of the letter dated January 4, 1988 from the
                             Administrator of National Banks for the Comptroller
                             of the Currency certifying approval of
                             consolidation and merger effective January 1, 1988
                             of Norwest Bank Minneapolis, National Association
                             with various other banks under the title of
                             "Norwest Bank Minnesota, National Association."*

                        f.   A copy of the letter dated July 10, 2000 from the
                             Administrator of National Banks for the Comptroller
                             of the Currency certifying approval of
                             consolidation effective July 8, 2000 of Norwest
                             Bank Minnesota, National Association with various
                             other banks under the title of "Wells Fargo Bank
                             Minnesota, National Association."****

          Exhibit 3.    A copy of the authorization of the trustee to exercise
                        corporate trust powers issued January 2, 1934, by the
                        Federal Reserve Board.*

          Exhibit 4.    Copy of By-laws of the trustee as now in effect.***

          Exhibit 5.    Not applicable.

          Exhibit 6.    The consent of the trustee required by Section 321(b) of
                        the Act.

          Exhibit 7.    Consolidated Report of Condition attached.

          Exhibit 8.    Not applicable.

          Exhibit 9.    Not applicable.

          *    Incorporated by reference to exhibit number 25.1(b) filed with
               registration statement number 333-74872.

          ***  Incorporated by reference to exhibit T3G filed with registration
               statement number 022-22473.

          **** Incorporated by reference to exhibit number 2f to the trustee's
               Form T-1 filed as exhibit 25.1 to the Current Report Form 8-K
               dated September 8, 2000 of NRG Energy Inc. file number 001-15891.

                                       2



                                    SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Wells Fargo Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 11th day of February 2004.

                                             WELLS FARGO BANK MINNESOTA,
                                             NATIONAL ASSOCIATION


                                             By: /s/ Joseph P. O'Donnell
                                             -----------------------------------
                                             Joseph P. O'Donnell
                                             Assistant Vice President

                                       3



                                    EXHIBIT 6

February 11, 2004

Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.

                                             Very truly yours,

                                             WELLS FARGO BANK MINNESOTA,
                                             NATIONAL ASSOCIATION


                                             By: /s/ Joseph P. O'Donnell
                                             -----------------------------------
                                             Joseph P. O'Donnell
                                             Assistant Vice President

                                       4



                                    EXHIBIT 7

                       Consolidated Report of Condition of

                Wells Fargo Bank Minnesota, National Association
           of Sixth Street and Marquette Avenue, Minneapolis, MN 55479
                     And Foreign and Domestic Subsidiaries,
                  at the close of business September 30, 2003,
          filed in accordance with 12 U.S.C.(S)161 for National Banks.



                                                                                       Dollar Amounts
                                                                                         In Millions
                                                                                       --------------
                                                                                          
ASSETS
Cash and balances due from depository institutions:
   Noninterest-bearing balances and currency and coin                                           $ 1,736
   Interest-bearing balances                                                                          2
Securities:
   Held-to-maturity securities                                                                        0
   Available-for-sale securities                                                                  1,659
Federal funds sold and securities purchased under agreements to resell:
   Federal funds sold in domestic offices                                                         7,165
   Securities purchased under agreements to resell                                                   30
Loans and lease financing receivables:
   Loans and leases held for sale                                                                19,457
   Loans and leases, net of unearned income                                         19,967
   LESS: Allowance for loan and lease losses                                           283
   Loans and leases, net of unearned income and allowance                                        19,684
Trading Assets                                                                                      153
Premises and fixed assets (including capitalized leases)                                            183
Other real estate owned                                                                              11
Investments in unconsolidated subsidiaries and associated companies                                   0
Customers' liability to this bank on acceptances outstanding                                         30
Intangible assets
   Goodwill                                                                                         291
   Other intangible assets                                                                           10
Other assets                                                                                      1,509
                                                                                                -------
Total assets                                                                                    $51,920
                                                                                                =======

LIABILITIES
Deposits:
   In domestic offices                                                                          $34,250
      Noninterest-bearing                                                           21,468
      Interest-bearing                                                              12,782
   In foreign offices, Edge and Agreement subsidiaries, and IBFs                                  5,458
      Noninterest-bearing                                                                0
      Interest-bearing                                                               5,458
Federal funds purchased and securities sold under agreements to repurchase:
   Federal funds purchased in domestic offices                                                    1,440
   Securities sold under agreements to repurchase                                                 1,303






                                                                               Dollar Amounts
                                                                                 In Millions
                                                                               --------------
                                                                                
Trading liabilities                                                                      2
Other borrowed money
   (includes mortgage indebtedness and obligations under capitalized leases)         4,769
Bank's liability on acceptances executed and outstanding                                30
Subordinated notes and debentures                                                        0
Other liabilities                                                                      951
                                                                                   -------
Total liabilities                                                                  $48,203

Minority interest in consolidated subsidiaries                                           0

EQUITY CAPITAL
Perpetual preferred stock and related surplus                                            0

Common stock                                                                           100
Surplus (exclude all surplus related to preferred stock)                             2,134
Retained earnings                                                                    1,421
Accumulated other comprehensive income                                                  62
Other equity capital components                                                          0
                                                                                   -------
Total equity capital                                                                 3,717

                                                                                   -------
Total liabilities, minority interest, and equity capital                           $51,920
                                                                                   =======


I, Karen B. Martin, Vice President of the above-named bank do hereby declare
that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.


                                                     ---------------------------
                                                                 Karen B. Martin
                                                                  Vice President

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.


- ----------------------------
Jon R. Campbell


- ----------------------------
Marilyn A. Dahl                       Directors


- ----------------------------
Gerald B. Stenson

                                       2